KL Trader Investment Research Articles

Author: kltrader   |   Latest post: Fri, 18 Jan 2019, 09:53 AM


Atlan - 3QFY19 Above Estimates

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Maintain BUY

3QFY2/19 core earnings came in above our expectations primarily due to the outperformance of the automotive segment from higher orders received. Atlan also declared a second interim net DPS of 10.0sen (YTD FY19: 20.0sen), above our estimates. We raise our FY19-21 core earnings forecasts by 10-11% and nudge up our SOP-TP by 10sen to MYR6.30.

Driven by automotive segment

Excluding one-off gains of MYR2.3m (i.e. forex, changes in fair value), 3QFY19 core net profit of MYR11.4m (+37% YoY, +13% QoQ) took 9MFY19 core earnings to MYR29.7m (+8% YoY), at 82% of our full-year estimate. YoY, 3QFY19 bottomline growth was driven by stronger automotive segment’s pretax profit (MYR5.5m vs. 3QFY18’s MYR1.3m) from higher customer orders (which also led to improved margins). Duty free pretax profit improved 7% YoY amid stronger revenue (+18% YoY), largely attributed to stronger demand for their products, better product mix and supply normalisation of key alcoholic products (namely cognac) which was affected by global supply disruption in 1HFY19. Pretax profit of the property and hospitality segment was flattish YoY.

Raising forecasts

We raise our FY19/20/21 core earnings forecasts by 11%/11%/10% after mainly tweaking our automotive segment’s assumptions (i.e. margins). Consequently, we nudge up our SOP-TP by 10sen to MYR6.30. We also raise our FY19E net DPS to 20.0sen (from 14.3sen).

Focusing on long-term prospects

We believe Atlan’s long-term outlook remains favourable, premised on its undervalued assets (i.e. Bukit Kayu Hitam in Kedah and two properties at Jalan Ampang, Kuala Lumpur) which could benefit from revaluation and/or redevelopment. Separately, end-3QFY19 net cash remained favourable at MYR209.6m (83sen/share).

Source: Maybank Research - 11 Jan 2019

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Labels: ATLAN

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