Period 2Q12/1H12
Actual vs. Expectations
The 1H12 net profit
of RM444.3m came in within expectations, which made up 54% and 52% of ours and
the consensus’ full year estimates of RM832.6m and RM859.5m respectively.
Dividends A
single tier dividend of 10.0 sen was announced as expected.
Key Results Highlights
QoQ, the 2Q12 revenue
of RM4.1b increased by 12% due to the stronger recovery in its automotive
segment. The 2Q12 net profit of RM224.2 was 2% higher due to the normalising
production of Toyota vehicles. Toyota and Perodua vehicles accounted for 46.3%
of the total industry volume of 162,680 units in 2Q12. However, its oil &
gas and equipment profit contributions were 95% lower due to dry-docking of
NAGA-1 and lower demand for equipment and spare parts during the quarter.
YoY, the 1H12 net
profit of RM444.3m improved 57% on the back of its strong revenue growth of 23%.
This was mainly due to the low base impact and positive recovery in the
automotive segment. The contribution from its oil & gas division jumped by
67% driven by improving contribution from NAGA-3 jack up rig, sixmonth
contribution from HAKURYU-5 semi-submersible rig and additional revenue from
Garraf Power Plant Phase-1.
Outlook Moving forward, 2H12 remains vibrant for the
group as we expect better sales on its automotive segment as the demand for its
newly launched Perodua Myvi remains strong and there is a continuous
improvement in loans processing lead time and approval success rate despite the
strict lending guidelines imposed by Bank Negara Malaysia.
Meanwhile, there is
also a brighter outlook for its O&G division due to positive developments
such as the increase in day rates for Naga 3 and with both of its Naga 2 &
3 operating at an efficiency rate of more than 95%.
Change to Forecasts
No changes to our
FY12-13 forecasts.
Rating Upgrade to OUTPERFORM
We have upgraded UMW
to an OUTPERFORM as expect upside surprise from its automotive and oil &
gas divisions.
Valuation We
have raised our Target Price from RM7.98 to RM11.17 based on 14x PER on its
FY13 EPS (previously 10x). The higher implied PER is fair as it is within the
5-year average coupled with the positive recovery momentum for its automotive
and oil & gas divisions. Risks (1) Disruptions in production due to natural
disaster (2) tightening in hire purchase regulation and (3) a steep drop in
crude oil price
Source: Kenanga
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