Period 3Q12/9M12
Actual vs. Expectations The 9M12 net profit (NP) of RM127.2m was
broadly in line with the consensus estimates and ours, making up 60.6% and
57.0% of the street’s estimate and our forecast of RM209.7 and RM223.2m
respectively. Note that the 9M results typically contribute around 58%-73% of
the full year earnings.
Dividends No
dividend was declared in the quarter.
Key Result Highlights
QoQ, the company typically performs better in
the 2H. Thus, the 3Q12 revenue improved QoQ by 11.3% as the company made higher
sales during the Hari Raya festive season in the quarter. In tandem, the NP QoQ
also grew significantly by 34.3% despite a higher tax bracket for the
quarter.
YoY, the 3Q12 revenue
increased by 12.6% on the back of the better growth rate from the retail
segment (+11.8% YoY) and property management services (+18.1%). The better
performance of the former was due mainly to new stores opening and the
reopening of another store (which was temporarily closed for an upgrade in Aug
2011). Meanwhile, the strong growth from the latter was attributable to new
shopping centres and benefits gained from the tenants revamp in some of its
existing shopping centres. Nevertheless, the 3Q12 NP grew a slower 5.3% YoY due
to a higher tax bracket charge.
YTD, the 9M12 revenue also registered a 10.5% growth
YoY due to the abovementioned reasons. However, the 9M12 NP grew a slower 2.5%
YoY due to a one-off recognition of net proceeds from an insurance claim of
RM10.9m in respect of business interruption and damages arising from the fire
incident in one if its shopping centres in Melaka in 1Q11. Excluding the oneoff
proceeds (hence a lower base last year), the company would have registered a
better YoY NP growth of about 9.2%.
Outlook We
expect the new outlet in Seri Manjung, Perak, which will be opened soon in
early Dec, to have a positive contribution to FY13 earnings. Meanwhile, we remain
positive on the company’s future prospect as there will be three more new
outlet openings in FY13-14 as well as the refurbishment of the existing ones.
Change to Forecasts While better sales were achieved in the 3Q, we
believe the coming 4Q should be even stronger due to the festive seasons. Thus,
we are maintaining our earnings estimates of RM223.2m and RM251.8m for
FY12-13E.
Rating Downgraded
to UNDERPERFORM
Despite an adjusted higher TP below, the limited upside of
the share price to the TP has led us to downgrade the stock’s rating to an
UNDERPERFORM.
Valuation We have revised our TP higher to RM11.30 (from
RM10.70 previously), based on a PER of 15.8x, which represents a +2SD to the
5-year average PER of 12x (vs. 15.0x at +1.5SD previously), over FY13 EPS (see overleaf
for details).
Risks A
slowdown in the global economy, which will cut the purchasing power of
consumers.
Source: Kenanga
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