Pantech’s 9MFY10 bottomline numbers were in line with our expectation, making up 79% of our full-year forecast. A drop in its net profit was mainly due to the timing difference arising from more expensive raw materials. Nonetheless, we see a gradual recovery for its manufactured products, for which sales jumped 51% q-o-q. With crude oil price trading above US$60/barrel, we expect improved sales from its trading division in the upcoming quarters. Hence, we maintain our FY10 and FY11 forecasts and maintain our Neutral call, at an unchanged TP of RM0.88.
Within estimates. Pantech’s 9MFY10 bottomline was within our expectation, making up 79% of our full year forecast. However, its 3QFY10 revenue of RM92.2m was 22.7% lower than that in the previous quarter, mainly due to a 35.6% dive in trading sales q-o-q. However, this was partly cushioned by improved sales from the manufacturing division. Net profit declined by 20.2% q-o-q to RM11.7m due to the timing difference between raw material and steel prices from July to August 2009.
Brighter quarters ahead. In our previous reports, we expected demand for Pantech’s manufactured products to recover gradually as stockists, particularly from US, start to replenish stocks. This was seen from the sharp 51% q-o-q jump in manufacturing sales although expensive raw materials eroded margins. Meanwhile, with crude oil price gradually moving up and trading above US$60/barrel (US$74.50 as at 22 Jan 2010), we believe that new exploration jobs will slowly come back and flow to Pantech’s trading division as it is a
the leading oil and gas pipe supplier in the region. Special interim dividend. Pantech has declared a special second interim single tier dividend of 1.5 sen, for a total dividend of 3 sen per share. This translates into a dividend yield of 3.1%. We believe the company would continue to maintain this quantum of dividend in the future as it has no plan to expand further in the medium term. The company has also pared down its debts, from a net gearing of 0.64x last year to 0.36x currently.
Maintain forecast. We maintain our FY10 and FY11 forecasts as we see sales recovery in its manufacturing division. Hence, we retain our previous TP of RM0.88 based on 6x PER on FY11 EPS. We maintain our Neutral recommendation.
1 comments:
blog walking...nice info...