Period 1QFY12/3MFY12
Actual vs. Expectations
Within the consensus
and our expectations. The 1QFY12 net profit made up 29% and 28% of ours and the
consensus’ forecasts of RM765.1m and RM791.5m respectively.
Dividends No
dividend was declared.
Key Result Highlights
YoY, the bottom line
improved by 45%. Toyota and Lexus sales have increased by 7.4% as the group
recouped its 2011 production shortfalls.
QoQ, 1Q12 net
earnings of RM220m made a significant jump from RM50.5m in 4Q, mainly boosted
by stronger earnings from its oil and gas (O&G) (+216%) as well as
equipment divisions (+321%), which recorded a profit from a loss previously.
This was mainly due
to stronger overall demand, particularly from the mining sub-sector and construction.
The company also secured new contracts for the marine and power equipments. In
addition, the additional full quarter contributions by Naga 3 and Hakuryu 5 as
well as from the Garraf Power Plant Phase 1 project also contributed to the
earnings.
Outlook Neutral.
We expect a better
1H12 for UMW as the group should see improvements in most of its segments. The
automotive division should expect pent-up demand, which should see a better YoY
rebound for auto sale.
Meanwhile, there is
also a brighter outlook for the O&G division due to positive developments such
as a 15% increase in day rates for Naga 3 and newly secured projects like
Gait-1, Oil India and Longitudinal Submerged Arc-Welded pipes to Oman.
Change to Forecasts
We have revised our
earnings up for FY12-13 by 7.2%-8.7% to RM832.6m-RM928.8m after adjusting for
higher contributions from its O&G and equipment divisions.
Rating MAINTAIN MARKET PERFORM
Sector driven call.
Valuation Inline with our earnings revision, we have
raised our target price from RM7.45 to RM7.98 based on an unchanged FY12E PER
of 10.0x.
Risks Prolonged effect from the credit tightening measures
Source: Kenanga
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