Period 2Q13
Actual vs. Expectations
The 1H13 net profit of RM508.9m accounted for 40%
of our FY13 full-year estimate and 42% that of the market consensus.
We consider this to
be within expectations as seasonally, 2H is much stronger than the 1H.
Dividends For the first time in more than five years,
the company did not declare any quarterly dividends. This is somewhat
disappointing. The last time it did not declare a quarterly dividend was in
1Q08.
Key Results Highlights
2Q13 net profit rose 1% QoQ to
RM256.1m although the revenue dipped by 2% to RM4.01b. This was mainly due to
growth at Wessex Water (+25% at PBT’ level) and the local IPPs (+10%) although
it was offset partially by Seraya, which saw its PBT falling 25% in the
quarter. The strong numbers from Wessex Water was due to the fact that it was
allowed to raise prices in Oct 2012. Meanwhile, YES’ losses at the pretax level
widened to RM77.0m from RM60.7m previously despite its revenue expanding 16%.
However, 2Q13 net
income, contracted 18% YoY from that of RM313.8m a year ago as it recorded a one-time
recovery of excess generation last year in 2Q12 while Seraya registered a lower
fuel oil price in the current quarter coupled with the lower sales volume for
its trading division. On a positive note, YES’ losses at the pretax level
narrowed to RM77.0m from RM102.1m in 2Q12.
Outlook The
company’s cash pile remained strong as RM10.0b but its dividend payouts have
been weakening consistently. Thus, we strongly believe that the group is
conserving cash for more M&A opportunities, which could give rise to good
bargain opportunities given the current global economic uncertainty.
Change to Forecasts
No changes to our FY13-FY14 estimates
and NDPS. However, we would trim our NDPS assumptions should the company continue
to disappoint in its dividend payouts in the coming quarters.
Rating Maintain MARKET PERFORM
Although the
dividends yields are unappealing, the stock is trading at trough levels of
FY12-13E PBV of 1.1x-1.0x and PER of 8x-9x.
Valuation Our
price target is maintained at RM1.51/share, based on an unchanged targeted FY13
net yield of 3.5%.
Risks Lower dividend payouts, YES’ losses continue
to widen and the rise in the global economic risks, especially in Europe.
Source: Kenanga
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