We deem NTPM’s 1QFY13 results well within our expectation as 2H is generally a stronger period. The better baby diaper sales lifted revenue for personal care products by a whopping 54.2% y-o-y, reaffirming our view that the ‘Dragon baby boom’ will boost baby products demand. EBIT margin widened by 1.3% due to better sales and favourable pulp and waste paper prices. Maintain BUY, with FVunchanged at RM0.55, based on 13x FY13 EPS.
Within expectation. The group’s 1QFY13 results were in line with our forecasts. Revenue inched up by 7.4% to RM107m, largely driven by higher personal care products sales (+54.2% y-o-y), buoyed by better domestic demand for baby diapers. This reaffirms our view in an earlier report that the ‘Dragon baby boom’ will lift baby products demand. Revenue from paper products was weaker by 3.2% y-o-y, no thanks to lower sales of tissue products to the export market. Overall, PBT increased 16.9% y-o-y due to better performance from personal care (PBT: +40%) and paper (PBT: +13.8%) products, while earnings rose 10.9% y-o-y to RM10.2m. Vis-a-vis 4QFY12, revenue and earnings were lower by 0.6% and 13.6% respectively due to losses arising from unfavourable foreign exchange amounting to RM0.9m and losses arising from the gestation period required for the company’s start-up tissue plant in Bentong.
Higher EBIT margin. EBIT margin improved by 1.3% y-o-y to 13.4% as the better margin from paper products (+2.2% y-o-y) more than offset the lower margin from the personal care segment (-0.8%). The higher sales and favourable pulp and waste paper prices also translated into the better EBIT margin.
Maintain BUY. We believe that NTPM’s efforts in increasing sales, reducing cost, improving operation efficiency and focus on product improvement will support its future earnings. As the current share price represents an 18.8% upside to our FV of RM0.55, maintain BUY.
Within expectation. The group’s 1QFY13 results were in line with our forecasts. Revenue inched up by 7.4% to RM107m, largely driven by higher personal care products sales (+54.2% y-o-y), buoyed by better domestic demand for baby diapers. This reaffirms our view in an earlier report that the ‘Dragon baby boom’ will lift baby products demand. Revenue from paper products was weaker by 3.2% y-o-y, no thanks to lower sales of tissue products to the export market. Overall, PBT increased 16.9% y-o-y due to better performance from personal care (PBT: +40%) and paper (PBT: +13.8%) products, while earnings rose 10.9% y-o-y to RM10.2m. Vis-a-vis 4QFY12, revenue and earnings were lower by 0.6% and 13.6% respectively due to losses arising from unfavourable foreign exchange amounting to RM0.9m and losses arising from the gestation period required for the company’s start-up tissue plant in Bentong.
Higher EBIT margin. EBIT margin improved by 1.3% y-o-y to 13.4% as the better margin from paper products (+2.2% y-o-y) more than offset the lower margin from the personal care segment (-0.8%). The higher sales and favourable pulp and waste paper prices also translated into the better EBIT margin.
Maintain BUY. We believe that NTPM’s efforts in increasing sales, reducing cost, improving operation efficiency and focus on product improvement will support its future earnings. As the current share price represents an 18.8% upside to our FV of RM0.55, maintain BUY.
Source: OSK
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