Chin Hin’s 1HFY17 net profit of RM15.1m (+9.9% YoY) is below expectations, making up only 28% and 33% of our and consensus full-year estimates respectively. While we expect subsequent quarters to be stronger, we are lowering FY17 estimates by a more significant 16.4% to account for unexpected losses in the wire mesh business and lower contributions from its distribution and ready-mixed concrete businesses. FY18 and FY19 estimates are lowered by c. 4.0% on weaker distribution-related contributions. While a near-term dampener, we continue to look forward to stronger earnings growth ahead, underpinned by 1) contributions from its capacity expansions in the autoclaved concrete and precast concrete businesses, and 2) recent earnings-accretive acquisitions (with profit guarantees), amongst others. We like Chin Hin’s growth prospects and retain our Outperform call. The target price is unchanged at RM1.55, implying a 13.5x PE multiple to FY18 EPS of 11.4sen (lower, as it incorporates recent 10% placement exercise). The company declared a single-tier divided of 2sen for the current financial year.
Source: PublicInvest Research - 25 Aug 2017
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red9five
Collection phase..
2017-10-06 15:36