Below - Reported 3QFY3/13 core loss of RM80.5m, dragged 9MFY3/13 earnings down to RM52.1m, achieving 15.1% of HLIB estimates and 13.3% of consensus. However, we remained positive on DRB’s restructuring plan.
Lower than expected automotive sales and higher than expected operational cost (promotional campaigns).
Declared interim gross dividend of 1.5 sen minus 25% tax. Highlights
3Q13 revenue increased 63.8% yoy due to the consolidation of Proton Group (including Lotus), but down 21.5% qoq on the back of excessive promotional campaigns to boost automotive (all marques e.g. Proton, Audi, VW etc) sales in the quarter.
Overall Group EBIT margin turned negative in 3Q13 due to the high sales and distributional expenses, combined with the lower revenue of automotive division. We understand that Proton was making minor profits while Lotus still incurred huge losses in the quarter.
Similarly, associate contribution dropped 20.9% qoq due to aggressive campaigns by Honda to boost year end sales.
Hicom Power disposal was completed by end 2012 for RM575m cash. DRB recognized disposal gain of RM412.6m and reversal of overhaul provision of RM78.9m in 3Q13.
Net gearing improved to 48.1% in 3Q13 from 56.7% in 2Q13, after using the cash proceeds from Hicom Power disposal to pare down debts level.
Cut earnings for FY13 by 54.3% after accounting for the lower automotive sales and aggressive promotional campaigns in FY13. We have also adjusted FY14-15 earnings downwards by 10.5% and 10.8% respectively.
BUY
Source: Hong Leong Investment Bank Research - 28 Feb 2013
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The Klang valley is already jam tight with cars. Want to put another one million cars on the road ??
2013-02-28 16:26
joncsk
Always the same excuses every qtr..... Target price also lowering already.
2013-02-28 12:11