Tan Chong’s 3QFY12 results were disappointing as earnings plunged by 45% y-o-y despite a 4% y-o-y revenue growth. The drop in earnings was attributed to the fulfillment of backlog orders 2Q which normalized. As such, 4Q earnings are expected to be strong as most of the production costs of the Almeras had been booked in 3Q. To be on the conservative side, we downgrade our earnings estimates by some 20%/6%/5% respectively for FY12/FY13/FY14 to reflect the higher production startup and higher manpower. This lowers our FV slightly to RM5.32, pegged at 11x PE. Maintain BUY.
High Almera production volume. Tan Chong’s 3QFY12 results were disappointing, as earnings plunged by 45% y-o-y despite 4% higher revenue y-o-y. This resulted in 9MFY12 earnings (YTD: 40%) to account for only half of our and consensus forecasts. The drop in earnings was attributed to the fulfillment of backlog orders in 2Q which normalized.
A stellar 4Q to be seen. With bookings of the Almera currently sturdy at more than 7,000 units since its launch on 30 Oct, 4Q earnings are expected to be strong. Our assumptions of 3,000 units of Almeras sold for 2012 and 12,000 units for 2013 will likely to be achievable. The Almera is Nissan’s best selling model and is the cheapest in the foreign B segment sedan market (8% cheaper than the Toyota Vios), with a spacious interior almost equivalent to a C segment Toyota Altis as its key selling point. Since its debut in the US, Thailand and China, an astounding 500,000 units had been sold. Our discussions with vehicle sales dealers reveal that bookings for the Almera are encouraging and those opting to have their cars delivered next year (for 2013 registration) could see a waiting period of two to three months. Tan Chong has an annual production capacity of 19,000 units for the Almera and the model boasts of having the highest localization rate within its stable of Nissan vehicles.
Downgrade earnings but BUY call maintained. To be on the conservative side, we are downgrading our earnings estimates by some 20%/6%/5% respectively for FY12/FY13/FY14 though we opine that there is a lot of room for any potential earnings surprise in view of the Almera’s encouraging booking numbers. This consequently lowers our FV, maintained pegged at 11x PE, slightly to RM5.32 from RM5.63. Maintain BUY.
FYE Dec (RM’m)
|
FY10
|
FY11
|
FY12f
|
FY13f
|
FY14f
|
Revenue
|
3505.2
|
3860.1
|
3809.3
|
4826.9
|
5450.4
|
Core Net Profit
|
224.8
|
213.5
|
171.2
|
315.9
|
364.1
|
% chg y-o-y
|
50.6
|
-5.0
|
-19.8
|
84.5
|
15.3
|
Consensus
|
197.8
|
304.6
|
341.2
| ||
Core EPS (sen)
|
34.4
|
32.7
|
26.2
|
48.4
|
55.8
|
Gross DPS (sen)
|
12.0
|
12.0
|
12.0
|
18.0
|
22.0
|
Dividend yield (%)
|
2.7
|
2.7
|
2.7
|
4.1
|
5.0
|
ROE (%)
|
13.4
|
11.6
|
8.8
|
14.3
|
14.6
|
ROA (%)
|
8.2
|
7.0
|
5.5
|
9.2
|
9.6
|
PER (x)
|
12.9
|
13.6
|
16.9
|
9.2
|
8.0
|
NTA/share (RM)
|
2.6
|
2.8
|
3.0
|
3.4
|
3.8
|
P/NTA (x)
|
1.7
|
1.6
|
1.5
|
1.3
|
1.2
|
EV/ EBITDA (x)
|
14.5
|
15.3
|
20.7
|
11.3
|
9.4
|
Results Table (RM’m)
3QFY11
|
2QFY12
|
3QFY12
|
Q-o-Q
|
Y-o-Y
|
9MFY11
|
9MFY12
|
YTD
|
Remarks
| |
Vehicle Sales
|
7,935.0
|
8,495.0
|
8,297.0
|
-2%
|
5%
|
25,241.0
|
24,830.0
|
-2%
|
Vehicle sales higher y-o-y
|
Revenue
|
905.4
|
985.4
|
937.7
|
-5%
|
4%
|
2,980.1
|
2,905.6
|
-2%
|
Within expectations
|
EBITDA
|
94.0
|
90.3
|
65.9
|
-27%
|
-30%
|
319.2
|
222.7
|
-30%
|
Below expectations due to fulfillment of backlog orders in 2Q which normalized.
|
Depreciation
|
-17.1
|
-18.3
|
-17.8
|
-3%
|
4%
|
-50.7
|
-52.9
|
4%
| |
EBIT
|
76.8
|
71.9
|
48.1
|
-33%
|
-37%
|
268.5
|
169.8
|
-37%
| |
Net Interest
|
-1.0
|
-4.4
|
-5.7
|
31%
|
467%
|
-8.3
|
-16.0
|
92%
| |
Associate
|
0.4
|
0.7
|
0.6
|
-10%
|
49%
|
1.2
|
1.6
|
30%
| |
EI
|
-2.1
|
-7.6
|
1.5
|
-120%
|
-174%
|
-2.3
|
-4.0
|
76%
| |
PBT
|
74.2
|
60.6
|
44.6
|
-26%
|
-40%
|
259.1
|
151.4
|
-42%
|
Below our projected earnings accounting for 51% of our full-year forecast
|
Tax
|
-19.6
|
-17.7
|
-12.3
|
-30%
|
-37%
|
-74.4
|
-44.6
|
-40%
| |
PAT
|
54.6
|
42.9
|
32.2
|
-25%
|
-41%
|
184.7
|
106.9
|
-42%
| |
MI
|
0.0
|
0.4
|
0.5
|
24%
|
-4630%
|
0.4
|
0.8
|
79%
| |
PATAMI
|
54.6
|
43.3
|
32.7
|
-24%
|
-40%
|
185.1
|
107.6
|
-42%
| |
Core PATAMI
|
56.6
|
50.9
|
31.2
|
-39%
|
-45%
|
187.4
|
111.7
|
-40%
|
Below expectations, accounting for 50%-52% of our and consensus estimates
|
Margins (%)
| |||||||||
EBITDA
|
10.4
|
9.2
|
7.0
|
-2.1
|
-3.4
|
10.7
|
7.7
|
-3.0
| |
EBIT
|
8.5
|
7.3
|
5.1
|
-2.2
|
-3.4
|
9.0
|
5.8
|
-3.2
| |
PBT
|
8.2
|
6.2
|
4.8
|
-1.4
|
-3.4
|
8.7
|
5.2
|
-3.5
| |
Core Net Income
|
6.3
|
5.2
|
3.3
|
-1.8
|
-2.9
|
6.3
|
3.8
|
-2.4
| |
EPS
|
8.68
|
7.80
|
4.77
|
-39%
|
-45%
|
28.7
|
17.1
|
-40%
| |
Gross DPS
|
0
|
6
|
0
|
NM
|
NM
|
6.0
|
6.0
|
0%
| |
NTA/Share
|
2.75
|
2.85
|
2.85
|
2.75
|
2.85
|
4%
|
EARNINGS FORECAST
FYE Dec (RMm)
|
FY10
|
FY11
|
FY12f
|
FY13f
|
FY14f
|
FYE Dec (RMm)
|
FY10
|
FY11
|
FY12f
|
FY13f
|
FY14f
| |
Key Assumptions
|
Cash Flow
| |||||||||||
Nissan Volume
|
34701
|
32273
|
35254
|
44830
|
48114
|
PBT
|
322.8
|
305.0
|
241.4
|
437.4
|
504.3
| |
Adjustments
| ||||||||||||
Income Statement
|
Depreciation
|
56.9
|
69.4
|
78.2
|
85.1
|
87.6
| ||||||
Revenue
|
3505.2
|
3860.1
|
3809.3
|
4826.9
|
5450.4
|
Others
|
16.1
|
15.0
|
20.6
|
28.0
|
35.1
| |
EBITDA
|
387.1
|
385.4
|
333.6
|
543.4
|
613.5
|
Operating profit before working capital changes
|
395.8
|
389.5
|
340.1
|
550.5
|
626.9
| |
EBIT
|
330.1
|
315.3
|
255.4
|
458.3
|
526.0
|
Working Capital
|
-328.9
|
-101.0
|
-243.9
|
-278.7
|
-244.4
| |
Associate
|
0.6
|
1.0
|
1.1
|
1.2
|
1.3
|
Cash Generated from Operating Activities
|
66.9
|
288.6
|
96.2
|
271.8
|
382.6
| |
EI
|
4.9
|
2.6
|
0.0
|
0.0
|
0.0
|
Net Interest Paid
|
-12.9
|
-13.8
|
-15.2
|
-22.1
|
-23.0
| |
PBT
|
322.8
|
305.0
|
241.4
|
437.4
|
504.3
|
Net Taxed Paid
|
-63.2
|
-97.3
|
-65.9
|
-118.9
|
-135.1
| |
Tax
|
-91.7
|
-89.6
|
-70.9
|
-122.5
|
-141.2
|
Others
|
-0.5
|
-0.5
|
0.0
|
0.0
|
0.0
| |
PAT
|
231.1
|
215.4
|
170.4
|
315.0
|
363.1
|
CFO
|
-9.7
|
176.9
|
15.2
|
130.8
|
224.4
| |
MI
|
-1.3
|
0.7
|
0.8
|
0.9
|
1.1
| |||||||
PATAMI
|
229.7
|
216.1
|
171.2
|
315.9
|
364.1
|
Acquisitions
| ||||||
Core PATAMI
|
224.8
|
213.5
|
171.2
|
315.9
|
364.1
|
Net Capex
|
-67.8
|
-129.9
|
-168.8
|
-170.2
|
-70.1
| |
Disposal
|
114.7
|
93.1
|
0.0
|
0.0
|
0.0
| |||||||
Balance Sheet
|
CFI
|
46.8
|
-36.9
|
-168.8
|
-170.2
|
-70.1
| ||||||
PPE
|
618.4
|
675.8
|
754.4
|
776.2
|
745.4
| |||||||
HP Receivables
|
284.6
|
386.8
|
381.7
|
462.9
|
448.0
|
Net change in borrowings
|
51.9
|
99.1
|
0.0
|
50.0
|
0.0
| |
Others
|
61.4
|
80.9
|
80.9
|
81.3
|
81.5
|
Dividends
|
-58.8
|
-58.8
|
-58.8
|
-58.8
|
-88.1
| |
LT Asset
|
964.4
|
1143.5
|
1217.0
|
1320.3
|
1274.9
|
Others
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
| |
CFF
|
-6.9
|
40.3
|
-58.8
|
-8.8
|
-88.1
| |||||||
Inventories
|
1005.3
|
960.0
|
1268.0
|
1245.7
|
1406.7
| |||||||
Receivables
|
246.5
|
226.1
|
208.7
|
264.5
|
298.7
|
Net increase in cash
|
30.2
|
180.4
|
-212.5
|
-48.1
|
66.2
| |
Investment
|
289.9
|
194.1
|
130.8
|
210.6
|
287.0
|
Beginning Cash
|
114.0
|
143.6
|
324.0
|
111.6
|
63.5
| |
Others
|
89.7
|
188.6
|
186.7
|
345.6
|
379.8
|
Others
|
-0.7
|
0.1
|
0.0
|
0.0
|
0.0
| |
Cash
|
150.1
|
324.6
|
111.6
|
63.5
|
129.6
|
Ending Cash
|
143.6
|
324.0
|
111.6
|
63.5
|
129.6
| |
ST Asset
|
1781.6
|
1893.4
|
1905.8
|
2129.8
|
2501.8
|
FCF to Firm
|
57.7
|
158.7
|
-132.6
|
-18.3
|
176.7
| |
Total Assets
|
2746.0
|
3036.9
|
3122.8
|
3450.2
|
3776.7
|
FCF to Equity
|
81.8
|
232.7
|
-161.0
|
3.4
|
146.6
| |
Share capital
|
336.0
|
336.0
|
336.0
|
336.0
|
336.0
|
Key Ratios
| ||||||
Reserves
|
1371.4
|
1529.7
|
1641.5
|
1898.7
|
2174.4
|
ROE (%)
|
13.4
|
11.6
|
8.8
|
14.3
|
14.6
| |
MI
|
8.6
|
8.3
|
7.6
|
6.5
|
5.5
|
ROA (%)
|
8.2
|
7.0
|
5.5
|
9.2
|
9.6
| |
Equity
|
1691.2
|
1849.2
|
1960.3
|
2216.5
|
2491.1
|
Net Debt / Net Cash
|
-266.5
|
-281.3
|
-557.7
|
-576.0
|
-433.3
| |
Net Gearing/ Net Cash
|
15.8
|
15.2
|
28.4
|
26.0
|
17.4
| |||||||
LT Borrowings
|
354.2
|
280.0
|
300.0
|
450.0
|
400.0
|
Current Ratio
|
2.8
|
2.2
|
2.4
|
3.0
|
3.1
| |
Others
|
55.0
|
56.3
|
61.4
|
67.0
|
78.7
|
Interest Coverage
|
12.0
|
12.7
|
9.1
|
16.3
|
17.6
| |
LT Liabilities
|
409.1
|
336.3
|
361.4
|
517.0
|
478.7
| |||||||
Per share Data
| ||||||||||||
ST Borrowings
|
352.4
|
520.0
|
500.0
|
400.0
|
450.0
|
Core EPS
|
34.4
|
32.7
|
26.2
|
48.4
|
55.8
| |
Payables
|
287.1
|
326.1
|
295.9
|
311.4
|
351.7
|
Gross DPS
|
12.0
|
12.0
|
12.0
|
18.0
|
22.0
| |
Others
|
6.2
|
5.2
|
5.2
|
5.2
|
5.2
|
Sales/Share (RM)
|
5.4
|
5.9
|
5.8
|
7.4
|
8.3
| |
ST Liabilities
|
645.6
|
851.4
|
801.1
|
716.7
|
806.9
|
BV/share (RM)
|
2.59
|
2.83
|
3.00
|
3.40
|
3.82
| |
Total Liabilities
|
1054.8
|
1187.7
|
1162.5
|
1233.7
|
1285.6
|
NTA/Share (RM)
|
2.56
|
2.80
|
2.97
|
3.36
|
3.79
| |
Equity and Liabilities
|
2746.0
|
3036.9
|
3122.8
|
3450.2
|
3776.7
|
FCFE/ Share
|
0.13
|
0.36
|
-0.25
|
0.01
|
0.22
| |
Margin (%)
|
Valuation
| |||||||||||
EBITDA
|
11.0
|
10.0
|
8.8
|
11.3
|
11.3
|
Core P/E
|
12.9
|
13.6
|
16.9
|
9.2
|
8.0
| |
EBIT
|
9.4
|
8.2
|
6.7
|
9.5
|
9.7
|
Dividend Yield
|
2.7
|
2.7
|
2.7
|
4.1
|
5.0
| |
PBT
|
9.2
|
7.9
|
6.3
|
9.1
|
9.3
|
P/Sales
|
0.8
|
0.8
|
0.8
|
0.6
|
0.5
| |
Effective tax rate
|
-28.4
|
-29.4
|
-29.4
|
-28.0
|
-28.0
|
P/BV
|
1.7
|
1.6
|
1.5
|
1.3
|
1.2
| |
PAT
|
6.6
|
5.6
|
4.5
|
6.5
|
6.7
|
P/NTA
|
1.7
|
1.6
|
1.5
|
1.3
|
1.2
| |
PATAMI
|
6.6
|
5.6
|
4.5
|
6.5
|
6.7
|
EV/EBITDA
|
14.5
|
15.3
|
20.7
|
11.3
|
9.4
| |
Core PATAMI
|
6.4
|
5.5
|
4.5
|
6.5
|
6.7
|
FCFE/ share Yield
|
2.8
|
8.0
|
-5.6
|
0.1
|
5.1
| |
Growth (% chg y-o-y)
| ||||||||||||
Volume
|
11.2
|
-7.0
|
9.2
|
27.2
|
7.3
| |||||||
Revenue
|
22.7
|
10.1
|
-1.3
|
26.7
|
12.9
| |||||||
EBITDA
|
68.2
|
-0.5
|
-13.4
|
62.9
|
12.9
| |||||||
EBIT
|
84.8
|
-4.5
|
-19.0
|
79.4
|
14.8
| |||||||
PBT
|
82.1
|
-5.5
|
-20.9
|
81.2
|
15.3
| |||||||
PATAMI
|
49.8
|
-5.9
|
-20.8
|
84.5
|
15.3
| |||||||
Core PATAMI
|
50.6
|
-5.0
|
-19.8
|
84.5
|
15.3
|
Source: OSK
No comments:
Post a Comment