Period 3Q12
Actual vs. Expectations
The 9M12 results came in within our
expectation but slightly above the street’s forecast with the net profit of
RM117.4m accounting for 75% of our FY12 full-year estimate and 79% that of the market
consensus.
Dividends No
dividend was declared as expected.
Key Results Highlights
The 3Q12 net profit rose 3% QoQ to
RM42.0m as revenue grew 3% in the quarter to RM542.4m. The slight improvement
in the earnings was mainly due to an improved sales volume and a lower taxation
charge (effective tax rate of 21% vs. 22% previously).
On a YoY comparison,
the 3Q12 net income surged 38% from RM30.5m in 3Q11, which was attributable to
the higher sales volume of 3% YoY and also due to the lower effective tax rate of
21% vs. 25% previously.
Nonetheless, the 9M12
net earnings contracted by 29% YoY to RM117.4m from RM166.0m in 9M11 despite revenue
rising 7% to RM1.57b from RM1.47b previously. The sharp decline was chiefly due
to a tariff revision, effective 1 Jun 2011, which saw the profit spread cut by
almost half to RM2.02/mmbtu from RM3.95/mmbtu previously.
Outlook The
new 40MMScdf gas supply from the Melaka RGT in Jan 2013 will be the earnings
catalyst for the company, which will bring a c.10% increase in the gas
supply.
The subsequent
30MMScdf and 40MMScdf additional gas supplies from the same Melaka RGT in Jan
2014 and Jan 2015 respectively will ensure a consistent earnings growth
post-2013.
Changes To Forecasts No
changes to our FY12E-FY14E forecasts.
Rating MAINTAIN OUTPERFORM
Valuation We
continue to like GASMSIA for its earnings quality and generous dividend payout,
which offer both growth and income attractions. We are maintaining our
OUTPERFORM call on the stock with a price target of RM2.94/DCF share.
Risks Should
the government decide to reduce the gas tariff, this will lead to a lower
margin spread and in turn, negatively impact the company’s profitability as was
seen previously in FY09.
Source: Kenanga
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