On an annualised basis, Leader Universal’s (Leader) earnings came in within our expectations, with YTD net profit accounting for about 44% of our FY projection. 2Q earnings fell 23% y-o-y largely due to lower revenue at its cable and wire division, which saw a steep decline in copper and aluminium prices. Nonetheless, we believe the company will see a revival in performance for FY10 as prices of copper and aluminium should rebound as demand picks up and sales improve spurred by demand from the Sarawak Corridor of Renewable Energy (SCORE) and other stimulus packages worldwide. We maintain our BUY call but with a higher TP of RM0.85 (previously RM0.79), pegged on its valuation as at FY10.
Things will get better. We believe orders for its cable and wire division will pick up in FY10. Our previous sales growth at 5% had been based on a conservative assumption but we are now slightly more bullish on its sales and are thus making a growth assumption of 10%. This in turn warrants an upward revision in our FY10 revenue estimates by 4.4% and net profits by 3.5%. This translates into an upward revision of its TP to RM0.82 from 0.79. BUY recommendation maintained.
Things will get better. We believe orders for its cable and wire division will pick up in FY10. Our previous sales growth at 5% had been based on a conservative assumption but we are now slightly more bullish on its sales and are thus making a growth assumption of 10%. This in turn warrants an upward revision in our FY10 revenue estimates by 4.4% and net profits by 3.5%. This translates into an upward revision of its TP to RM0.82 from 0.79. BUY recommendation maintained.