Period 3Q12/9M12
Actual vs. Expectations The 9M12 net profit (NP) of RM73.8m came
in below the consensus estimate of RM102.8m, representing 71.8% of its
full-year estimate. However, it was in line with our estimate, making up 77.3%
of our forecast of RM95.5m.
Dividends No dividend was declared for the quarter as
expected. An estimated 4.7 sen in DPS should be declared around Apr- May 2013
as the final dividend for FY12.
Key Result Highlights QoQ, Revenue and PBT declined 8.2% and
2.7%, respectively. The decline was due mainly to lower sales in all divisions.
Nevertheless, the drop in PBT was cushioned y better margins recorded by cans
(+1.1ppt) and carton (+1.4ppt) divisions.
YoY, the 9M12 revenue increased 7.3% on the back of higher
sales registered by the cans (+6.1% YoY), cartons (+7.6% YoY) and contract
packaging (+19.1%) divisions. However, both the 9M12 PBT and NP dropped by
about 18% YoY, dragged down by the margin squeeze in the cans division. The
improved margins seen in the cartons division (+2.5 ppt) was not enough to
mitigate the impact of the 5.4ppt decline in the cans’ PBT margin above. We
believe that the margin erosion of the cans segment was due mainly to a higher
cost of material consumed and inventory write-offs during 2Q12.
On a more positive note, the cartons and contract packaging
divisions registered better performance compared to last year. Cartons division
9M12 PBT improved by 48.4% YoY. This was mainly attributed to the better sales
in its domestic and export market for the food and beverage sectors in both its
Malaysian and Vietnamese operations. Meanwhile, there was also a 12.8% jump in
the PBT of the contract packaging division YoY. Beside the improvements in both
domestic and export sales, we believe the better profit in this division was
due to the exclusion of the loss-making discontinued operation in Vietnam,
which was disposed off by the group recently.
Outlook Although there was hiccup in the cans
division this year, we remain positive on the company’s ability to further improve
its production efficiency to continue delivering organic growth ahead and also
on its efforts to develop its regional markets.
Change to Forecasts We have fine-tuned our FY12-13E NP by
+1.8% and -7.7% respectively to RM97.2m-RM108.8m (fromRM95.5m-RM117.9m).
Rating Maintain OUTPERFORM
Valuation Due to our new lower earnings estimate for
FY13, we have reduced our TP to RM2.79 (from RM3.00 previously). Our TP is
based on an unchanged Fwd PER of 11.4x over the adjusted FY13 EPS of 24.5 sen
(vs. 26.5 sen previously).
Risks An upswing in commodity prices will hit
the company’s earnings.
Source: Kenanga
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