Period 1Q13
Actual vs. Expectations 1Q13 net profit of RM253m was within expectations, making up 20% each of our and street's forecast.
Dividends 1Q13 interim tax exempt dividend of 0.9375sen (-50% YoY; 0% QoQ), which only made up 15% of our FY12E NDPS of 6.30sen.
Key Results Highlights YoY, 1Q13 net profit achieved flattish growth of 3% although topline grew 15%. Revenue was boosted by Bestarinet (YES), improved tariffs for Wessex and Seraya's higher sales volumes. However, this was negated by; 1) Malaysian IPP's PBT declining 41% to RM51m due to scheduled maintenance; 2) investment PBT still fell by 70% albeit the higher associates' contributions due to significantly lower dividend income; 3) Seraya's higher fuel cost; 4) Wessex's impacted by higher operating costs and depreciation.
QoQ, 1Q13 net profit fell 38% whilst revenue remained flat, because of last quarter's one-off gain on de-recognition of financial assets and Wessex enjoying lower UK corporate tax of 2%. Positively, YES pretax losses have narrowed to RM61m from 4Q12's RM95m due to Bestarinet. We do expect 'breakeven' after FY14E.
Outlook Record cash pile of RM10.0b but dividends are historically weak. As highlighted earlier, we strongly believe the group is conserving cash for more M&A opportunities, which could give rise to good bargains given global economic uncertainty.
Change to Forecasts No changes to FY13-14E earnings. However, we reduce FY13-14E NDPS by 16% to 5.3sen (3.5% yield) each. We strongly believe the group will try to match dividend yields to its cost of funds (current effective rates are 3.5%).
Rating Maintain MARKET PERFORM
Although dividend yields are unappealing, the stock is trading at trough levels of FY13-14E PBV of 1.1x-1.0x and PER of 8.7x-8.5x.
Valuation Lower TP to RM1.51 (RM1.80 previously) based on an unchanged target FY13E net yield of 3.5% and lowered FY13E NDPS of 5.3sen.
Risks Lower dividend payout. YES losses continue to widen. Global economic risks, especially Europe.
lotsofmoney
Francis Yeo is a christian. It is obvious that he does not apply christian principle to his business. This is what we call a pseudo christian. Pls prove me wrong.
2012-11-23 14:04