The Star Online: Business
The Star Online: Business |
- IGB shares unaffected by disqualification from Taipei project
- KLCI may test immediate support line of 1,615
- Kenanga remains upbeat on QL Resources
| IGB shares unaffected by disqualification from Taipei project Posted: 25 Feb 2013 06:15 PM PST Published: Tuesday February 26, 2013 MYT 10:15:00 AMKUALA LUMPUR: IGB Corporation Bhd's share price was unaffected on Tuesday by the recent disqualification of its joint venture in a multi-billion ringgit Taipei land development project. At 9.46am, it was up one sen to RM2.27. There were 8,700 shares done. However, the FBM KLCI fell 3.07 points to 1,624.28. Turnover was 92.96 million shares valued at RM87.24mil. There were 80 gainers, 153 losers and 174 counters unchanged. IGB announced on Monday its joint bid with Taipei Gateway International Development Co. Ltd for a land development investment in the Airport MRT System Taipei train station special zones C1 & D1, was disqualified. The Taipei City Government's development of rapid transit system and IGB could not agree on the terms of the award and were deemed disqualified from the Taipei prject. To recap, IGB announced in October 2012 that its unit, Mid Valley City Sdn Bhd and Taipei Gateway, had submitted a tender for the proposed joint land development investment Reports stated the bid was to build the Taipei Tiwn Towers at a cost of RM7.3bil and RM8.35bil. |
| KLCI may test immediate support line of 1,615 Posted: 25 Feb 2013 05:37 PM PST Published: Tuesday February 26, 2013 MYT 9:01:00 AM |
| Kenanga remains upbeat on QL Resources Posted: 25 Feb 2013 05:32 PM PST Outperform Target Price: RM3.40 AS feared, the nine-month financial year 2013 net profit of RM99.7mil came in below estimates, comprising 66% and 64% of the street's estimate and our forecast of RM151mil and RM156mil, respectively. As expected, no dividend was declared in the quarter. Fiscal year (FY) 2013 third-quarter revenue was down by 2.8% due to the lower sales recorded in integrated livestock farming (ILF) at -9% quarter-on-quarter (q-o-q), which offset the increased sales in palm oil activities (POA +21.5% q-o-q). The pre-tax profit declined by a higher 15.2%, largely dragged down by the margin compression in the ILF division . Third-quarter revenue is expected to improve 7.6% on the back of better sales from marine product manufacturing (+2.7% year-on-year), ILF (+8.7% y-o-y) and POA (+11.9% y-o-y). Nevertheless, pre-tax profit dropped by 8.4% due to a 58.6% decline in ILF profit. This was mainly due to a lower raw material trade margin and lower farming margins arising from a steep increase in global feed cost due to the drought in the United States. For the year-to-date, September forecast of pre-tax profit is pretty flat, with only a 0.2% growth y-o-y despite a 9.3% growth in sales due to a more challenging operating environment. The slower pre-tax profit growth compared with the sales growth was mainly due to the margin decline in ILF , which was fortunately offset by the rise in the margin at MPM. There was a strong pre-tax profit growth rate registered in MPM (+44.6% y-o-y) due mainly to the higher contribution and better economies of scale from its surimi and fishmeal operations in Malaysia and Indonesia. We remain positive on QL as it has always delivered earnings growth and expansion plans, which will help its businesses achieve better economies of scale. Nonetheless, we have cut our FY2013 and FY2014 estimated net profits by 11%-13% to RM138mil-RM157mil after lowering the earnings of POA and ILF due to the weaker results. As we are rolling our valuation to FY2014, we have arrived at a new target price of RM3.40 from RM3.50 previously based on an unchanged financial daily FY2014 estimate profit-earnings ratio (PER) of 18.5x. Risks include global economic and weather uncertainties. We have cut our FY13-14E net profits by 11%-13% to RM138mil-RM157mil after lowering the earnings of POA and ILF. Despite the better volume and sales growth from ILF, the nine-month to September 2013 pre-tax profit tumbled by 27.7% y-o-y. This was due to the sharp increase in global feed cost from the drought in the US, which has lowered farming margins in turn. Nevertheless, we believe the feed cost should stabilise in FY2014 based on the lower consensus estimate of soybean prices. As a result, we are lowering our pre-tax profit margin estimate for FY13 from 8.4% to 5.7%, which is pretty much in line with the nine-month actual reported margin of 5.4%, and estimating a normalised 7.3% margin for FY14 (from the previous pre-tax margin of 8.7%). On the other hand, we have also lowered our earnings estimate from POA to streamline it with our in-house crude palm oil price assumptions of RM2,500-RM2,700 for FY13-14E (from an assumed RM3,000 for QL previously). By Maybank IB Research Hold Target Price: RM4.40 MSM's 2012 fourth-quarter net profit of RM38mil (-22% quarter-on-quarter (q-o-q), -50% year-on-year (y-o-y)) disappointed on account of lingering high input costs despite lower raw sugar prices; and an unexpected lumpy zakat payment of RM17mil. Taking these factors into account, we slash our fiscal year 2013-2014 net profit forecasts by 19% and 15%, respectively. Our dividend discount model-based target price is also lowered to RM4.40. Our "hold" call remains, pending further clarity on MSM's outlook in an analyst briefing. MSM was not able to convert seasonally 2012 second-half higher revenue to bottom-line growth, as input cost remains high. We believe that this is due to MSM's utilisation of its expensive sugar inventory it has locked in 50% of its sugar supply at US$0.26/lbs for the next three years. Also, MSM recorded a substantial zakat expense of RM16mil in 4Q12 alone (RM1mil in 3Q12). Full-year NP of RM201mil (-24% y-o-y) made up of 78% and 85% of our and consensus forecasts, respectively. Raw sugar prices have fallen by 17% from US$0.24/lbs earlier in 2012, hovering around US$0.20/lbs by the end of 2012. The downtrend is continuing; raw sugar prices have fallen by 9% year-to-date to around US$0.18/lbs. Based on this, we continue to expect lower input cost in the near term (on a blended basis despite 50% of its sugar supply having been procured at higher prices), which will translate into better margins and profits. MSM is also looking to expand upstream into sugarcane plantations, to further reduce its input cost in the future. Factoring in recurring zakat payments as well as lower margins from high input cost, we cut our FY13-14 earnings by 19% and 15%, respectively. Based on a 65% net profit payout assumption, MSM's net yield is still decent at 4+% for the next three years. PPB GROUP BHD By Kenanga Research Outperform (maintain) Target Price: RM14.38 WILMAR International Ltd's financial year ended Dec 31, 2012 (FY12) core net profit of US$1.17bil came in above both the consensus and our expectations. It made up 104% of the consensus' FY12 forecast of US$1.12bil and 113% of our forecast of US$1.04bil. Wilmar's Oilseeds and Grains (OAG) division registered a better-than-expected profit before tax (PBT) of US$46mil in the fourth quarter of 2012 (4Q12) and turned the division's FY12 results into profitability with US$14mil in PBT (against a US$32mil loss before tax in the first nine months of FY12). The strong turnaround should be due to Wilmar's prudent management of its soybean crushing margin by undertaking crushing only when it was profitable to do so. A final ordinary dividend of S$0.03 was announced. This is in line with the better than expected earnings. The dividend was better than our expectation of S$0.02. Quarter-on-quarter, Wilmar's 4Q12 core net profit improved 3% to US$401mil. The higher profits from its Palm and Laurics (PAL) and sugar divisions were neutralised by the lower profit from its OAG division, leading to just the small overall rise. Year-on-year, Wilmar's FY12 core net profit declined 23% to US$1.17bil, caused mainly by the 97% fall in its OAG's division PBT to US$14mil. That said, the OAG division did recover strongly in the second half of 2012 from a loss before tax of US$92mil in the first half. We believe the worst could be over for PPB with a possible positive earnings surprise in its FY12 results (due Feb 27 or Feb 28). Financial year ending Dec 31, 2013 estimated (FY13E) outlook also seems better with Wilmar's management revealing that the company's soybean crushing margin had improved in China. This is in line with our view of a lower input cost (soybean) due to the expected bumper crop in South America. We have raised PPB's FY12E earnings by 7% to RM748mil after taking into account the better than expected margin at Wilmar's OAG division. Our FY13E earnings are maintained at RM832mil, as we had already assumed the OAG division's earnings to recover in FY13E to a PBT of US$150mil. We maintain our "outperform" call on PPB. We are maintaining our target price of RM14.38 based on a forward price-to-earnings ratio of 20.9 times on its FY13E earnings per share of 68.8 sen. Risks include below expectation margins for the OAG and PAL divisions. Reduce (maintain) Target Price: RM4.13 LAST Friday, Parkson Holding's (PHB) 51.5%-owned unit Parkson Retail Group (PRG) reported its financial year ended Dec 31, 2012 results. Gross sales proceeds (GSP) and revenue grew by 4.8% and 4.2% y-o-y to 17.2 billion yuan and 4.5 billion yuan respectively, driven by a 4.7% increase in consessionaire sales and a 4.4% growth in total merchandise and direct sales. Notwithstanding the healthy growth in PRG's GSP and revenue, FY12's same-store-sales growth of 0.4% was unexciting and is below management's earlier guidance of a 2% growth. We attribute this to the weaker consumer sentiment in China and hence on discretionary spending coupled with the stiffer-than-expected competition faced by PRG. Taken together with the overall increase in operating expenses (a y-o-y increase of 12.4%), staff cost (a y-o-y increase of 28.5%) and rental expenses (a y-o-y increase of 34.8%), PRG's earnings before interest and taxes (EBIT) margin contracted sharply by 10 percentage points to 24.7%. Consequently, PRG's FY12 core net profit fell by 24% to 850.8 million yuan. Results were within our expectations but below street estimates, accounting for 96% of our and only 79% of the street's full-year projections. On a sequential basis, PRG's fourth quarter of 2012 GSP, revenue, and core net profit registered healthy double-digit growths of 17%, 15% and 20% to 4.5 billion yuan, 4.6 billion yuan and 1.78 billion yuan, respectively, mainly driven by Christmas and year-end sales. EBIT margin also expanded by 2.2 percentage points to 19%. On a y-o-y comparison, however, PRG's profit before tax and core net profit fell by 26.7% and 36.5%, respectively, owing to higher operating expenses (4Q12: 669.7 million yuan versus 4Q11: 573.1 million yuan) and higher tax expenses (4Q12's tax rate of 31% versus 4Q11's tax rate of 21%). Dividend per share (DPS) of 0.14 yuan for FY12 declared, vis-vis FY11's 0.18 yuan was in line with our expectations. PRG has proposed a final dividend of 0.07 yuan, bringing its total dividend per share declared for FY12 to 0.14 yuan, based on a payout ratio of 46%. Note that the quantum of DPS declared in FY12 was lower than that of FY11's DPS of 0.18 yuan. We maintain our DPS forecast of 0.15 yuan for FY13, based on a payout ratio of 45%. There is no change in our FY13 to FY15 net profit forecasts for now, pending PHB's full-year FY06/12 results. We maintain a "reduce" call, with an unchanged RNAV derived target price of RM4.13. While China's GDP growth is expected to pick up to about 8.4% in 2013 from 7.8% in 2012, we believe PRG's earnings growth prospects (accounting for more than 85% of PHB's EBIT) will remain unexciting. We gather that PRG will continue with its expansionary plans, albeit at a slower pace. As such, we believe PRG will incur higher upfront operating and rental expenses, which will offset the tepid SSS growth projected to only 2% to 4% in FY13. |
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