BONIA (FV RM3.15 - BUY) 9MFY12 Results Review: Another Decent Performance

Bonia’s 9MFY12 results were below consensus and our estimates. Revenue and core net profit ticked up by 31.9% and 43.5% y-o-y respectively, thanks to better performance  of its Malaysia and Singapore operations. Margins continued to improve on the back of  a stronger top-line.  We are cutting our FY12 and FY13 forecasts by 6.8% and 5.5% respectively  in light of the lower anticipated royalty income and higher expenses. Maintain BUY with a new FV RM3.15.

Below expectations. Bonia’s 9MFY12 results were below consensus and our full-year forecasts. Revenue and core earnings (excluding the fair value adjustment of RM4.6m on  a  long-term loan  in  accordance with FRS10) stood at RM441.6m and RM44.5m, representing a y-o-y growth of 31.9% and 43.5% respectively. The stronger performance was mainly attributed  to higher revenue from both Malaysia and overseas operations. Singapore’s revenue jumped significantly by 140% y-o-y – thanks to the RM98.2m revenue contribution from Jeco, followed by Malaysia’s y-o-y revenue growth of  31%. The top-line of overseas operations contracted by 38%, whereby the revenue growth from Indonesia (+58%) and Saudi (+54%) were dragged down by the restarting of operations in Vietnam. The royalty income realized during this quarter was only around RM300k, which was much less than expected.

Decent sales growth. YTD, the Malaysia consignment counters recorded a 12% y-o-y same-point-sales (SPS) growth and the boutique stores charted a 17% y-o-y samestore-sales (SSS) growth. The SSS growth for Singapore outlets stood at 4%. For the months of January-March, the SPS and SSS  for Malaysia  were lower at 6% and 5% respectively,  while the SSS growth in Singapore was flattish due to an early Chinese New Year. On a q-o-q basis, overall  revenue and core profit dipped by 9% and 14.4% respectively  due to lower sales and higher operating expenses in conjunction with  the expansion of overseas market. Gross and EBIT margins continued to trend upwards to 59.4% and 16.9% due to the impressive revenue growth.

Maintain BUY.  Judging from the weaker royalty income and costlier operating expenses, we are  revising our FY12 and FY13 earnings down by 6.8% and 5.5%. The group will continue to explore opportunities locally and abroad. Lately, the group through its Singapore subsidiary was appointed the master  franchisee for “Renoma Café Gallery” for Malaysia, Singapore and Indonesia. The 1^st concept store will be launched by the end of 2012. Maintain BUY with a FV of RM3.15, based on 11x FY12 EPS.

Source: OSK