Zack, why sell soon? i believe depreciation of ringgit, the recent TPPA and the new factory capacity will boot up kawan share price in the near future. i was hope that it can break RM3. and also give more dividend to shareholder is the best!
-9M net profit results were above our expectations mainly due to huge 3Q15 forex gains. 9MFY15 net profit met 95% of our full-year forecast.
-3QFY15 forex gains of RM4.8m were due to stronger US$. 9M15 forex gains stood at RM7.2m.
-New factory should be up by 1Q2016. Kawan can offer new products from new factory.
-Maintain Add. As we raise our FY15-16 EPS by 14-37% and roll over our P/E valuation to end-2016, our target price rises to RM4.48.
9M15 net profit up 64% yoy 9MFY15 revenue was up 10% yoy but net profit skyrocketed 64% to RM25.1m. The higher profit growth was mainly due to lower raw material costs and the stronger US$. 70% of Kawan’s revenue are exported, with the US being its biggest export market. No interim dividend was declared, in line with our expectations.
3Q15 the best quarter ever 3Q15 was the best quarter ever for Kawan. 3Q net profit came in at RM12.2m, aided by forex gains of RM4.8m in just this quarter. 9M15 forex gains came in at RM7.2m, compared to forex gains of only RM0.5m in 9M04.
Domestic sales were flat The domestic market was the largest revenue contributor in 9MFY15, but revenue inched down 0.9% yoy. This is one of the rare few times where domestic revenue slid. Even during the 2008-2009 global financial crisis, domestic sales were up yoy. North America, the second-largest market, saw sales rise by 20% yoy to RM39.9m in 9MFY15. Europe posted the fastest growth in 9MFY15, with sales rising by 24% yoy.
New plant target to be ready by end-1Q16 Kawan is building a new factory in Pulau Indah, Selangor, which will be 5-6x the size of the existing freezer warehouse. Expected to be up and running by end-1Q16, the new factory and production line will allow the company to develop new products and target new markets. Its existing plant is already running at full capacity.
Net cash balance sheet Kawan's balance sheet is healthy, with net cash of RM33m as at end-Sep. Its existing cash pile and proceeds from warrants (RM20m thus far in 9M15) should help fund most of the new factory's capex.
Maintain Add, target price raised We raise our FY15-16 EPS by 14-37% to reflect forex gains and lower raw material costs. Our target price rises, as we roll it forward to end-2016, with the target P/E basis unchanged at 20x, a 25% discount to our F&B sector P/E of 25x. The stock remains an Add. Potential catalysts include successful completion of its new factory and strong export sales.
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....
zackyh
70 posts
Posted by zackyh > 2015-11-03 19:05 | Report Abuse
sell soon?