Period 1Q13
Actual vs. Expectations 1Q13 net profit of RM253m was within expectations,
making up 20% each of our and street’s forecast.
Dividends 1Q13
interim tax exempt dividend of 0.9375sen (-50% YoY; 0% QoQ), which only made up
15% of our FY12E NDPS of 6.30sen.
Key Results Highlights YoY, 1Q13 net profit achieved flattish growth
of 3% although topline grew 15%. Revenue was boosted by Bestarinet (YES),
improved tariffs for Wessex and Seraya’s higher sales volumes. However, this
was negated by; 1) Malaysian IPP’s PBT declining 41% to RM51m due to scheduled maintenance;
2) investment PBT still fell by 70% albeit the higher associates’ contributions
due to significantly lower dividend income; 3) Seraya’s higher fuel cost; 4)
Wessex’s impacted by higher operating costs and depreciation.
QoQ, 1Q13
net profit fell 38% whilst revenue remained flat, because of last quarter’s
one-off gain on de-recognition of financial assets and Wessex enjoying lower UK
corporate tax of 2%. Positively, YES pretax losses have narrowed to RM61m from
4Q12’s RM95m due to Bestarinet. We do expect ‘breakeven’ after FY14E.
Outlook Record
cash pile of RM10.0b but dividends are historically weak. As highlighted
earlier, we strongly believe the group is conserving cash for more M&A
opportunities, which could give rise to good bargains given global economic
uncertainty.
Change to Forecasts No changes to FY13-14E earnings. However, we reduce
FY13-14E NDPS by 16% to 5.3sen (3.5% yield) each. We strongly believe the group
will try to match dividend yields to its cost of funds (current effective rates
are 3.5%).
Rating Maintain MARKET PERFORM
Although
dividend yields are unappealing, the stock is trading at trough levels of
FY13-14E PBV of 1.1x-1.0x and PER of 8.7x-8.5x.
Valuation Lower
TP to RM1.51 (RM1.80 previously) based on an unchanged target FY13E net yield
of 3.5% and lowered FY13E NDPS of 5.3sen.
Risks Lower
dividend payout. YES losses continue to widen. Global economic risks,
especially Europe.
Source: Kenanga
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