Price keep on DROPPING kanasai..., any bad news???
TDM - Seeing Stronger Earnings In 4Q
TDM 9MFY16 reported a core net profit of RM36.1m, making up 55% of our full year earnings forecasts after stripping out unrealized gain on the foreign exchange in fixed income securities amounting to RM8.4m and impairment loss on receivable, RM1.3m. Though it fell below our expectations, we think that it will be able to catch up in 4Q given the recovery in FFB production and sharp increase in CPO prices. Hence, our earnings forecasts remain unchanged. No dividend was declared for the quarter. We maintain our Outperform call with an unchanged TP of RM0.85.
- 3QFY16 revenue (QoQ: -0.3%, YoY: +4.3%). 3QFY16 revenue increased 4.2% YoY to RM102.8m, led by an improved revenue from healthcare segment while plantation sales remained steady. During the quarter, plantation sales fell slightly to RM57.9m as weaker FFB production (-26.7% YoY) was cushioned by stronger CPO prices (+25.2% YoY). Average CPO prices jumped from RM2,102/mt to RM2,631/mt while palm kernel prices surged from RM1,417/mt to RM2,288/mt. Healthcare sales registered a 14% YoY increase on the back of a 10% growth in the number of both inpatients and outpatients.
- 3QFY16 core earnings (QoQ: +76%, YoY: +85.2%). Though healthcare earnings dropped 26% YoY to RM1.7m, the Group’s earnings rose 85.2% YoY, boosted by plantation earnings after stripping out the RM2.1m unrealized FX gain in fixed income securities. Plantation earnings surged 130% YoY to RM19m, driven by stronger palm kernel price, which helped lower the production cost and lower start-up losses in Indonesian operation. On the other hand, healthcare earnings weakened due to higher admin costs as a result of higher staff costs and pre-operating costs at Kuala Terengganu Medical Specialist, which is scheduled to open soon.
- Maintain Outperform call. Though 9-month earnings met only 55% of our full-year forecasts, we remain upbeat on the 4Q earnings outlook, led by recovery of FFB production and stronger CPO prices. Healthcare arm is likely to register better earnings on the back of new hospital contribution.