AmResearch
DRB-Hicom - Operating performance deteriorates sharply BUY
- We maintain BUY on DRB-Hicom Bhd, with an unchanged fair value of RM3.65/share – a 15% discount to our SOP value of RM4.31/share.
- DRB-Hicom’s 9MFY14 result came in below expectations; it was dragged down by a significant dip in operating profit, which led to a core net loss in 3Q on lower automotive sales.
- For the nine-month period, it posted a core net profit of RM162mil (vs. a net loss of RM10mil in 9MFY13) on the back of a core net loss of RM45mil in 3QFY14. This represented only 37% and 46% of our and consensus numbers.
- DRB-Hicom declared a single-tier interim dividend of 1.50 sen/share (3QFY13: 1.50 sen gross less tax) amounting to RM29mil, which will be paid on 28 April 2014.
- The exceptional items in 3Q included a gain of RM111.7mil on the bargain purchase of Composites Technology Research Malaysia Sdn Bhd (CTRM).
- Notably, the automotive division slipped into an operating loss of RM75mil vs. a profit of RM147mil in the preceding quarter and a loss of RM89mil a year earlier.
- No details were given except that the group achieved a lower pre-tax profit of RM174.4mil in 3QFY14 vs. RM227.6mil in 2QFY14, mainly due to lower performance of certain automotive companies in the group.
- Automotive revenue in 3QFY14 fell by 13% QoQ, but was up by 26% YoY. For the 9MFY14, automotive still post an operating profit of RM152mil on the back of the strong 1HFY14 performance.
- Overall, revenue rose by only 2.7% YoY for 9MFY14, dragged by the underperformance of the property, asset and construction segment.
- DRB-Hicom said that in light of the highly competitive and challenging business landscape, the group will continue its efforts to improve operational efficiencies and to manage costs.
- The acquisitions of CTRM and Konsortium Logistik Bhd will broaden the group’s business activities in the composite material manufacturing and engineering industry and the integrated logistics services sector, respectively.
- We will be reviewing our forecasts, with a downside bias following the 3QFY14 result.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
profit profits
The title of post "Operating performance deteriorates sharply BUY"
Is "Operating performance deteriorates sharply" good sign to business ?
If not, why call with big BUY at the end ?
Sound like conman, unless I misinterpret the comments.
2014-03-01 00:18