87% price drop compare to Q42017 affected by pulp price raw material used. With major 55% boost on production capacity to 170,000 tonnes per year from 110,000 tonnes. Stronger sales contribution from Indo-China market. no doubt it will bounce back to TP: 0.65 soon.
Strong growing sales from NTPM (Vietnam) pushes rapid expansion, urgent needs to increase production capacity. With possible future venture into Wood Pulp Plant tends to helps on reducing raw material price subsequently increase its profit margin.
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Previously the company has always managed to deliver a profit of at least RM50mil to its shareholders (last achieved in FY17). In FY18 the group only managed to record a full year core profit of RM35.5mil.
This downward profit trend continues in FY19 with 1H19 profit of only RM10.2mil. Management blames the lower performance due to an increasing trend of operating cost in particular raw material, labour and energy cost which combined resulted in lower profit margin to the business. This is more pronounce in the Paper Product segment where revenue has actually increase but profit fell due to profit margin compression from the higher virgin pulp and waste paper cost. If the profit margin stays at the current level, NTPM is only expected to record a profit of around RM20-25 mil for FY19. At the current share price, a PAT of RM25mil would value the company at a PE valuation of 24x. Normally investors would want a profit growth of at least 15% per annum (profit to double in 5 years) for them to pay a high PE valuation.
The group balance sheet is not that bad with net gearing of 60%. In term of PB the company is currently trading at 1.2x PB.
If you are looking to diversify your portfolio outside of NTPM (due to earnings weakness in the near future) I would recommend you to look at MBMR.
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.
For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV and also the new Alza in 2H19.
Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. Most analysts have a TP of above RM3 for the company with Hong Leong being the lowest at RM3.13 and Maybank the highest at RM4.50.
Yes, confirmed. They has been storing huge volume of pulp in their warehouse. Machine are commissioning and fine tune now, if they start production, This will be 40% increase of production line.
Day 38 of Fundamental Daily, YAPSS will be covering NTPM Holdings Berhad's fundamental via a short animated video. I hope it helps and please enjoy the video, see ya! #YAPSS #FundamentalDaily #NTPMHoldingsBerhad
Good results. Up up upgrade from hold to buy . Progress of this company is they now doing 5G toilet paper, which fastest to whipped out stain rather than using water. Wow...
Cash flow and liquidity in very bad shape. Dividend expected to be reduced to 0.80 cents only this FY. I think they have no problem increasing the revenue but can't say so for the rest.
There is a reason why the share price had gone up lately .. goreng factor, I don't think so. There is always a lag factor in paper business, up to a period of about six months. If you were to go to the ' US Producer Price Index: Pulp, Paper and allied Products " you will notice that NTPM last 2 quarterly results coincided with when the price indices were, at among its highest. Even in June Quarter when it registered a loss, it was confident in declaring dividend, cos the pulp price had come down. Since Pulp's peak price index in December, the index had reduced by about 30% as at end of October 2019 while exchange rate remained. Of course, the best time NTPM had, were the days when Pulp price were down and ringgit strong.
Agreed with William Wang. Have been building my portfolio on this stocks from 47 sen. Their expansion will pay off well coincide with the drop of paper price. The profit margin easily go back to early 2018 level.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
shpg22
2,984 posts
Posted by shpg22 > 2018-06-25 19:09 | Report Abuse
STRONG SELL.
Record low net profit
Fair price 0.28 @ forward P/E of 17x.