Period 4Q12/FY12
Actual vs. Expectations FY12 core net profit* of RM64m was within both
consensus and our estimates. The results made up 95% of the consensus forecast
of RM67m and 100% of our forecast of RM64m.
Dividends Single
tier dividend of 5.0 sen was announced and this is below our expectation of
6.9sen.
Payout
ratio has been lower than expected at 32% (against our estimate of 40%).
Key Results Highlights YoY, FY12 core net profit tumbled 59% to RM64m
as the plantation division PBT plunged 44% to RM94m although timber suffered a
Loss Before Tax of RM13m (FY11: RM50m PBT). Plantation fell victim to low CPO
prices at RM2862/mt (-13%) while timber division products prices fell by
14%-20%.
QoQ, 4Q12 core net profit tumbled 69% to RM9m
as plantation division PBT declined 53% to RM20m. This was caused by extremely
low CPO prices of RM2347/mt (-22%). Timber division Loss Before Tax deepens to
RM14m due to asset impairment provision of RM13m for its Tasmania veneer mill.
Outlook Expecting CPO prices to average at RM2500/mt in
FY13E which should keep its earnings at low levels of RM63m (-2% YoY).
Change to Forecasts Maintain FY13E earnings of RM63m which is way below
consensus’ estimate of RM109m. Note that our CPO prices estimate is only
RM2500/mt. With YTD average CPO prices of only RM2308/mt, we think consensus’
average estimate of RM2950/mt maybe too bullish.
Rating Maintain UNDERPERFORM
Potential downgrade in consensus’ FY13E earnings
is likely to add pressure to the stock’s share price.
Valuation Maintain our TP of RM2.84 based on unchanged 1.0x
FY13E Book Value of RM2.84.
Risks Better
than expected prices for CPO or timber products.
Source: Kenanga
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