Multi Sports’ 1QFY12 revenue and earnings surged 31.8% and
39.5% to RM94.6m and RM16.6m respectively, mainly bolstered by higher
sales across all product segments as
well as the larger production
capacity. Margin, however, remained flat
as labor and raw material costs increased, although this was partially offset
by higher selling prices. Maintain BUY, at a FV of RM0.89, premised on the company’s
good dividend yield, decent results, and cheap PER of <2X.
1Q generally weaker.
The group’s turnover and earnings stood at RM94.6m (+31.8% yo-y) and RM16.6m (+39.5% y-o-y) respectively,
mainly bolstered by stronger sales across all segments and the bigger
production capacity, which the company raised from 35m pairs to 45m pairs per
year. Revenue from RB products soared 133.3% y-o-y, followed by the EVA MDII
(+38.6%), TPR (+31.3%) and MDI (+5.4%) segments, which saw sales volume surge
110.8%, 32%, 27.7% and 4.6% respectively. The company maintained its production utilization rate at a moderate 82%. On q-o-q basis, revenue and net profit contracted by 18.2% and
19.4% respectively, largely due
to the fewer working days during the
month coinciding with the Lunar New Year holidays. We deem the results in line
with our expectations.
Flattish margin. Gross profit margin dipped marginally from
28.8% to 28.3% y-o-y, mainly due to the higher production cost as a result of
increased labour and raw material expenses,
but this was partially mitigated by the
uptick in average selling price
from RMB20.58 to RMB21.17.
Maintain BUY. We
believe the company’s ongoing capacity expansion will bump up the group’s
earnings further and remain optimistic on the demand for sports-shoe soles and sports
shoes in China given the country’s growing population. Given the stock’s
lucrative dividend yield of 9%, solid track record and cheap valuation of
<2x PER, we see no reason why
investors should give Multi Sports a
miss. Maintain BUY with our FV unchanged
at RM0.89, based on a 5x FY12 EPS.
Source: OSK
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