By Maybank IB Research
23 May 2012
Maintain BUY. QL’s FY3/12 net profit of MYR132m (+6% YoY) came
below our expectations, making up 93% of our MYR142m full-year
forecasts. We should nevertheless see a stronger contribution from its
overseas operations in FY3/13-14 as capacity utilisation gathers
momentum. We maintain our earnings estimates and reiterate our BUY
call with an unchanged MYR3.75 DCF-based target price.
FY3/12 below expectations. In 4QFY3/12, net profit of MYR32m was
flat YoY but down 7% QoQ due to a seasonal impact on its Marine
Product division. However, contributions from its new surimi plant in
Surabaya and new layer farms in Cianjur, Indonesia and Tay Ninh,
Vietnam, helped the group to achieve another year of growth with
another record profit.
Contribution from Indonesia. Revenue from the Marine Product
division grew 8.2% YoY in 4QFY3/12 due to higher contribution from
both Malaysian and Indonesian operations. Pre-tax profit jumped 29%
YoY as margins expanded a healthy 1.8ppts. Cumulatively, revenue for
the division grew 5% YoY in FY3/12 but margins were hit by lower fish
landing in 1H, which caused the PBT margin to decline by 1ppt YoY.
Durable growth in Livestock division. The Integrated Livestock
division recorded another year of growth in both revenue (+12.5% YoY)
and pre-tax profit (+6.6% YoY). Revenue growth was due to
contributions from its new farms in Tay Ninh and Cianjur, but startup
costs and lower margins from its feed raw materials trading caused a
slight 0.5-ppt decrease in pre-tax margins.
Volatile CPO prices. In FY3/12, the Palm Oil division booked in
revenue of MYR355m (+6.8% YoY) due to a higher average CPO price
of MYR3,150/mt compared to MYR3,000/mt in FY3/11. Pre-tax profit
surged due to higher contributions from its own estates, as well as
higher associate contributions. That said, revenue and pre-tax profit
plunged 26% and 59% YoY respectively in 4QFY3/12 as a result of
lower CPO prices.
Share price: MYR3.16
Target price: MYR3.75
[Source]
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