Johore Tin Berhad - Dragged By Shipping Container Shortage

Date: 22/03/2021

Source  :  PUBLIC BANK
Stock  :  JOHOTIN       Price Target  :  2.08      |      Price Call  :  BUY
        Last Price  :  1.63      |      Upside/Downside  :  +0.45 (27.61%)

Johore Tin Berhad’s (JTB) net profit fell by 31% YoY to RM8.1m in 4QFY20, mainly dragged by lower sales from the F&B segment. After adjusting for one-off items, JTB’s full-year FY20 core net profit came in at RM40.3m. The results were below both our and consensus estimates, at 87% and 89.2% respectively. The discrepancy in our results was mainly due to the lower than-expected revenue from the F&B segment given the lack of container spaces and the higher steel prices. As such, we are adjusting our forecasts for FY21-22F downwards by an average of 4% to account for the higher steel prices. Note that the Tin Manufacturing segment contributes c.23% of JTB’s revenue in FY20. Nevertheless, we remain positive on JTB’s future lookout, mainly driven by the upcoming contribution from its Mexico operations and the capacity expansion in the sweetened condensed milk facilities. Following our earnings revision, our SOP-based TP for JTB is lowered to RM2.08 (previously RM2.20). For the quarter, JTB declared a single tier 4th interim dividend of 1 sen, bringing its FY20 dividend per share to 5.4sen. Our Outperform call on JTB is retained.

  • 4QFY20 revenue decreased by 10.3% YoY to RM137.9m, owing to weaker sales recorded by the F&B (-15.4% YoY) segment. This was mainly due to the lower sales volume from its dairy products as global logistics were impacted by the lack of container spaces and higher freight costs. On the other hand, the decline in the F&B segment was partially cushioned by the increase in printing of tinplate services sales from the Tin Manufacturing (+10.6% YoY) segment.
  • 4QFY20 pre-tax profit fell by 31.9% YoY to RM10.5m, mainly affected by lower sales volume from F&B segment and higher raw material cost. Furthermore, despite recording higher revenue for the Tin Manufacturing segment, PBT margin for the segment fell to 6.8% (4QFY19: 21.6%) as steel prices continue to rise. While JTB had adjusted its selling price to account for the higher raw material cost, the price adjustments were not in full effect yet.
  • Dividend. JTB declared a fourth interim dividend of 1 sen per share, bringing its DPS to 5.4 sen for FY20, as compared to a 6.4sen DPS in FY19. This translates to a dividend payout of 42% in FY20.

Source: PublicInvest Research - 22 Mar 2021

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