Period 3Q12
Actual vs. Expectations
The 9M12 net profit (NP) of RM4.8m
was below our expectations, making up only 53.9% of our full year forecast of
RM8.9m.
Dividends No
dividend was declared for the quarter.
Key Results Highlights
QoQ, the revenue and NP declined
25.5% and 64.0% respectively. These were due to several significant projects
being recognised in 2Q12 after they were delayed in 1Q12.
YoY, the 9M12 revenue
jumped by 14.7% on the back of higher sales from all the regions (Malaysia,
+7.3%, South East Asia, +19.1% and China, +42.9%). However, the 9M12 NP was down
by 30.2% due to higher operating expenses arising from capacity expansion with the
opening of five regional offices in new markets in the past one year. Besides
this, there were also RM3m additional expenses being spent for regional
technical investment. Excluding these higher development expenses, we believe
that the 9M12 results would have actually been in line with our forecast.
Outlook We
believe the company will continue to strengthen the contributions from its
overseas units. In fact, contributions from overseas improved from 35.7% of the
group’s revenue in 9M11 to 39.8% in 9M12.
We are still looking
forward to see Cuscapi concluding a project with one of the biggest fastfood
restaurant chains in Philippines in the near future, which has been delayed
since late last year.
Change to Forecasts Maintaining our earnings estimates of RM8.9m–RM11.4m
at this juncture.
Rating Maintaining
MARKET PERFORM
We are maintaining our MARKET PERFORM rating on the stock
pending further updates from the management on the company’s future regional investments
as well as the potential expenses to be incurred on such investments.
Valuation We
are maintaining our TP of RM0.41 for now (based on a PER of 8.7x over its FY13E
earnings) but will review it in due course after getting further updates from
the management above.
Risks Delay
in its projects implementation.
Source: Kenanga
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