Within expectations Tomei Consolidated Bhd
(Tomei) FY11 results were within our expectations. Net profit of RM31.2m
clocked in at 96% of our full year target whilst revenue of RM505.4m was 10%
higher than our estimate. For the full year under review, revenue surged 42%
YoY, while operating margin improved marginally from 10.4% a year ago to 10.7%.
The better results were contributed by both manufacturing & wholesale and
the retail segments on higher gold prices (Figure 2). Revenue contribution from
manufacturing & wholesale sales jumped 53% from RM74.4m to RM113.6m. PBT
contribution soared 70% to RM8.3m from RM4.9m. Higher earnings in the manufacturing
& wholesale segment was mainly due to higher sales volume to other jewellery
retailers. Revenue contribution from the retail segment rose 39% to RM391.8m
whilst PBT from retail segment rose 41% to RM24.2m. Improved consumers spending
in gold investment products and higher retail price in gold contributed to better results. The
acquisition of the ‘Goldheart’ brand with 4 additional retail outlets also contributed positively to the group.
On a quarterly basis, 4Q revenue was
relatively flat at RM137.1m compared to previous quarter’s RM135.3m.
PBT of RM10.7% was however 27% lower
QoQ, impacted by fluctuation in gold prices. On a yearly basis, 4Q results were
generally better than the corresponding quarter of last year. Revenue surged
46% YoY and net profit rose 25% YoY to RM6.2m from RM5.0m a year ago.
Fair Value of RM1.10 Gold prices fluctuated
and peaked at USD1,900.23/oz on 5 September 2011 before it fell to as low as
USD1,545.97/oz on 29 December 2011. It then picked up to close to USD1,770/oz
recently. Tomei is
undervalued, compared to the gold price
movements (Figure 1). We have introduced our FY13 forecast and are
maintaining our BUY recommendation
on Tomei with a fair value of RM1.16.
Source: Jupiter Securities
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