WTK’s FY12 earnings of RM45.6m (-33.2 y-o-y) missed our estimates but were in line with consensus estimates. Profits suffered amid poor weather conditions in Sarawak and persistently weak timber demand. We lower our plywood ASP slightly as we still do not see concrete evidence of strengthening demand from Japan. We cut our FY13 earnings by 7.9% and lower our FV to RM0.97. Maintain NEUTRAL.
Short on OSK estimate, but in line with consensus. WTK registered 4QFY12 revenue of RM195.6m (-7.1% y-o-y, -1.9% q-o-q) and earnings of RM10.5m (-47.7% y-o-y, -39.0% q-o-q). Unfavourable weather conditions in Sarawak slowed sales volume while weak timber selling prices dragged down profits. Meanwhile, its full-year FY12 revenue and net profit came in at RM768.7m (+12.0% y-o-y) and RM45.6m (-33.2% y-o-y) respectively amid slowing log demand and soft plywood prices. The year’s earnings fell short of our estimates, accounting for 91.5% and 98.9% of our and consensus forecasts respectively.
Timber prices still under pressure. In FY12, WTK’s round log sales volume dipped 3.4% y-o-y amid poor weather and slow uptake from its major customers. India continued to be the company’s largest round log export destination, representing 79% of the group’s overall log sales. Demand from China, meanwhile, accounted for 11% of its total log volume. In contrast, WTK’s plywood division volume surged 25.7% y-o-y in FY12. Selling prices remained unattractive, falling by 7.6% y-o-y. Buyers from Japan and Taiwan combined accounted for nearly all of the company’s plywood sales, with Japan accounting for 88% of its plywood volumes. While hopes are high on Japan’s accelerating fiscal spending and infrastructure expenditures giving timber demand a boost, recent prices and housing starts data have yet to provide concrete evidence of a recovery in demand.
Maintain NEUTRAL. We are moderating our FY13 plywood selling price assumption slightly and lowering our FY13 earnings forecast by 7.9%, but keeping our FY14 estimates unchanged. We value WTK at a FV of RM0.97, based on a 9.0x FY13 PER.
Short on OSK estimate, but in line with consensus. WTK registered 4QFY12 revenue of RM195.6m (-7.1% y-o-y, -1.9% q-o-q) and earnings of RM10.5m (-47.7% y-o-y, -39.0% q-o-q). Unfavourable weather conditions in Sarawak slowed sales volume while weak timber selling prices dragged down profits. Meanwhile, its full-year FY12 revenue and net profit came in at RM768.7m (+12.0% y-o-y) and RM45.6m (-33.2% y-o-y) respectively amid slowing log demand and soft plywood prices. The year’s earnings fell short of our estimates, accounting for 91.5% and 98.9% of our and consensus forecasts respectively.
Timber prices still under pressure. In FY12, WTK’s round log sales volume dipped 3.4% y-o-y amid poor weather and slow uptake from its major customers. India continued to be the company’s largest round log export destination, representing 79% of the group’s overall log sales. Demand from China, meanwhile, accounted for 11% of its total log volume. In contrast, WTK’s plywood division volume surged 25.7% y-o-y in FY12. Selling prices remained unattractive, falling by 7.6% y-o-y. Buyers from Japan and Taiwan combined accounted for nearly all of the company’s plywood sales, with Japan accounting for 88% of its plywood volumes. While hopes are high on Japan’s accelerating fiscal spending and infrastructure expenditures giving timber demand a boost, recent prices and housing starts data have yet to provide concrete evidence of a recovery in demand.
Maintain NEUTRAL. We are moderating our FY13 plywood selling price assumption slightly and lowering our FY13 earnings forecast by 7.9%, but keeping our FY14 estimates unchanged. We value WTK at a FV of RM0.97, based on a 9.0x FY13 PER.
Source; OSK
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