UMW Holdings held its
analyst briefing yesterday following the release of its 4QFY12 results.
Management reviewed the group’s stellar performance in 2012 and highlighted the
business prospects of each of the group’s divisions for 2013. For 2013, UMW has
set a combined target sales of 299,000 units for Toyota and Perodua, which will
be backed by launches of newly upgraded models. We also expect a better
performance from the Oil & Gas division in FY13, with contributions from
all its NAGA rigs and inclusive of its newly acquired NAGA 4.
Record sales in 2012.
Based on data released by the Malaysian Automotive Association (MAA), in 2012,
UMW Toyota sold a total of 106,641 units of vehicles (including Lexus), an
increase of 20% YoY, which exceeded its internal target of 104,000 units.
Similarly, Perodua’s 2012 sales, which grew 5% YoY to 189,137, surpassed its
full-year target of 188,000 units of cars. For 2013, management has set a sales
target of about 105,000 units for Toyota vehicles, which will be backed by new launches
such as the next generation of Corolla Altis, new Vios and RAV4. UMW Toyota’s
new target is a slight increase of 1% from 2012, which we think is reasonable
considering its current more competitive and uncertain operating environment,
and the already saturated passenger car market.
Higher sales target
for Perodua. Following its strong performance in 2012, Perodua has
increased its sales forecast by 3% to 194,000 units for 2013. Recently, it
announced plans to set up a new plant which will be able to produce 100,000
vehicles p.a. on a one-shift cycle, bringing its total production (together
with its current plant) to 300,000 units p.a. The new plant is expected to be
up and running by mid-2014.
Better performance
from Oil & Gas in 2013. This financial year will see contribution from
all of group’s rigs, NAGA 1, 2 and 3. The group has recently taken delivery of
NAGA 4, its third jack-up drilling rig. UMW signed an agreement to purchase the
rig in June 2012 at a cost of USD214m. The rig was constructed by Keppel FELS
Limited. We understand that UMW is in the midst of finalising the contract for
NAGA 4, which is planned to be finalised and announced as early as March 2013.
Listing of the
O&G unit. Recall that the group has restructured its O&G division,
dividing its operations into core and non-core businesses. The group has
announced its intention to list the core businesses, which include drilling
operations (onshore, offshore and workover services) and oilfield services
(generator packages, pipe coating, inspection, repair and threading). The
listing of the O&G unit’s core businesses will provide UMW with working
capital to increase its fleet of drilling rigs. This is in line with the
group’s long-term plans to expand into regional markets and to become a global
O&G player.
De-listing WSP.
According to management, the terms and conditions such as the shareholding
structure will be confirmed after the de-listing process is completed.
Management had earlier expressed the possibility of disposing off the non-core
businesses consisting of the manufacturing of oil country tubular goods (OCTG)
and line pipes, fabrication and oilfield products. UMW’s decision on whether to
keep or dispose of its stake in WSP will be made known in June 2013.
Maintain Market
Perform. We are maintaining our earnings estimates and our MARKET PERFORM
rating on UMW with a target price of RM12.37 based on a PER of 14x on its FY13
EPS.
Source: Kenanga
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