Period 4QFY12/12MFY12
Actual vs. Expectations
Below ours and the consensus
expectations.
For FY12, the company
reported a core net loss of RM48.8m (after stripping off an unrealised foreign
exchange gain of RM29.7m). The result was far off ours and the street’s FY12
full-year estimates of RM27.3m and RM5.8m respectively.
Dividends No dividend was declared.
Key Result Highlights
QoQ, Ann Joo posted an improvement on
its 4Q12 core earnings to turn back to a profit of RM7.6m from a staggering
loss of RM47.1m in 3Q12. The improvement was mainly due to a better cost
structure and the recovery in the market condition, which resulted in a
reversal of the allowance for inventories written down to net realisable value
of RM34.38m.
For the full year, it
recorded a core net loss of RM48.8m (after stripping off the exceptional forex
gain of RM29.7m) compared to a profit of RM110.2m in FY11. This was due to a
slower sales number of RM2080.6m (-7%) and higher financing costs. The slower
sales were mainly attributed to the decrease in its export sales tonnage, which
was affected by the sharp decline in the international steel prices and demand.
Outlook The global industry uncertainties remain as
the main challenge for Ann Joo as the global steel industry growth is expected
to be lacklustre due to an oversupply situation and also a slower demand growth
from China.
Nonetheless, the
domestic steel demand will be supported by the execution of sizeable projects and
hence, we reckon that there will be spillover demand from potential projects
such as MRT, the conveyor belt and jetty portion of the Vale site, the Manjung
expansion as well as the Iskandar project in Johor Bahru, which should benefit
Ann Joo’s trading division in the short term.
Change to Forecasts No changes to our earnings forecast at this juncture.
However, we might look at a further downgrade on our earnings later if results continues
to disappoint.
Rating Maintain UNDERPERFORM.
Valuation We are maintaining our target price of RM1.17 for
now, based on a 0.5x P/B ratio on its FY13 BVPS.
Risks Volatile scrap prices and a slower than
expected global demand.
Source: Kenanga
No comments:
Post a Comment