Period 4Q12/FY12
Actual vs. Expectations
The FY12 net profit (NP) of RM118.4m beat
expectations, coming in above the consensus estimate of RM98.3m and our
forecast of RM97.2m by 20.4% and 21.8% respectively.
Dividends A
final single tier of 2.5 sen and special single tier dividend of 3.75 sen was
declared for the quarter, bringing the total for FY12 to 12.5 sen, which was
14.7% above our estimate of 10.9 sen.
Key Result Highlights
QoQ, 4Q12 revenue and PBT increased by 11.3%
and 57.4% respectively. The improvement was due mainly to higher sales in the
cans (+12% QoQ) and cartons (+11% QoQ) divisions. A significant 7.8ppt PBT
margin increase from the cans division helped to cushion the margin decline in
the cartons and contract packaging divisions. The better margin was mainly due
to improved economies of scale and a RM12.1m reversal of a previous impairment
loss on inventory.
YoY, the 4Q12 revenue
increased 7.0% on the back of higher sales registered by the cans (+9.0% YoY),
cartons (+3.0% YoY) and contract packaging (+3.5%) divisions. Both the 4Q12 PBT
and NP also improved by 69% and 212% YoY buoyed by the increased sales and the reversal
of previous impairment loss on inventory from cans division.
For the YTD, the FY12
revenue and PBT registered marginal growth of 7.2% and 2.5% YoY respectively.
The PBT growth was mainly supported by the cartons division, which recorded a
27.3% YoY growth to mitigate the decline in the cans and contract packaging
divisions. The growth was because of the higher revenue and improved operating
efficiency in both the Malaysian and Vietnamese operations. Kian Joo certainly
ended the year on a much exciting note with a double-digit NP growth of 13.8%
YoY, due partially as well to a lower tax bracket of 12.1% as compared to 20.8%
last year.
All in, given such a good set of results, this may certainly
help to soothe previous concerns over the impact of all the changes affecting
the company last year.
Outlook Although there were hiccups in the cans
division early last year, Kian Joo still made its way to a positive earnings
growth at the end of the year. Thus, 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 Maintaining our earnings forecast for now
ahead of further updates from management.
Rating Maintain OUTPERFORM
Valuation Maintaining
our TP of RM2.79. Our TP is based on an unchanged Fwd PER of 11.4x over the
adjusted FY13 EPS of 24.5 sen.
Risks Volatile commodity prices will likely hit the
company’s earnings.
Source: Kenanga
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