News Kian
Joo has proposed final single tier dividend of 2.5 sen per share and a special
single tier dividend of 3.75 sen per share for FY11.
The payment
of the dividends is subject to shareholders’ approval at the annual general meeting
of the company on 18 June 2012.
Comments The
total dividends of 12.5 sen for FY11 came in slightly below our expectation of
13.75 sen. However, it still translates into an attractive dividend yield of
6.6%.
The payout
ratio was slightly lower in FY11 (50%) as compared to FY10 (57%). This was because
FY10 was an exceptionally good year with enhanced margins of 10.3% (vs. 9.7% in
FY11) and better NP growth of 109% YoY (vs. 3% in FY11).
Outlook Dividend-wise,
we are expecting a higher FY12E total dividend of 13.7 sen, translating into an
attractive dividend yield of 7.3%.
Fundamentally,
we remain positive on the company’s ability to further improve production and
operational efficiency to continue delivery organic growth as well as expansion
into regional markets.
Forecast Maintaining
our FY12-13E NP of RM122mRM138m. Strong growth is expected, mainly to be driven
by the increasing sales (double digits growth) from the aluminium cans and
corrugated carton divisions.
Rating
MAINTAIN OUTPERFORM
Valuation Despite the ongoing legal tussle, we observe
that the company’s operations continue to function normally. In fact, the top
line is growing healthily. As a result, we believe the company is still
undervalued, trading at near trough Fwd PER of 6.9x. Thus, we are maintaining
our OUTPERFORM rating on Kian Joo with an unchanged TP of RM2.19 given the
potential total returns upside of 23% to our TP of RM2.19. Our TP is based on
8.0x Fwd PER over FY12 EPS of 27.4 sen.
Risks Global
economic uncertainty could drive a price upswing in commodities, which will in
turn hit the company’s earnings.
Source: Kenanga
No comments:
Post a Comment