Period 1QFY12/3MFY12
Actual vs. Expectations
Below ours and the consensus expectations.
The 1QFY12 net profit made up 10% and 12% of ours and the
consensus’ forecasts of RM313.6m and RM273.5m respectively.
Dividends No dividend was declared.
Key Result Highlights
QoQ, 1Q12 earnings of RM31.6m were flat while EBITDA margins
decrease from 5.9% to 5.5%, mainly driven by lower margins from its automotive
division which recorded a drop from 8.5% to 7.0%. Margin compression from automotive
was due to lower sales mix of vehicles and higher direct selling costs.
YoY, bottom-line dipped by 58% as EBITDA margins dropped
from 10% to 6%, mainly due to the stock constraints in popular models of Nissan
(e.g. Navarra, Grand Livina and Livina X-Gear) which saw its total sales volume
falling by 15%.
Furthermore, the
credit tightening has also taken a toll on the overall sales and margins as
more efforts were directed to campaigns to promote sales. Outlook
Neutral.
We expect a slower 1H12 due to stricter loan requirements.
However, sentiment for Tan Chong may improve towards the 2H12 with the launch of
its anticipated B segment sedan in September 2012, which is currently lacking
in Nissan’s portfolio.
Change to Forecasts
We cut our earnings for FY12-13 by 5.2%-14.2% to
RM297.3m-RM322.7m.
For FY12-13E, we have imputed for higher admin and marketing
costs.
We have also decrease our FY13E assumed volume sold due to
the credit tightening.
Rating MAINTAIN MARKET PERFORM
Sector driven call.
Valuation We are reducing our target price from RM4.67
to RM4.42 based on an unchanged FY12E PER of 10.0x.
Risks Prolonged effect from the credit tightening measures.
Source: Kenanga
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