TDM BHD

4Q FY2011 Results
Within expectation TDM's FY11 results were within our expectation. Net profit of RM156.85m clocked in at about 103% of our estimate while its revenue of RM503.23m accounted for about 98% of our full year target. For the full year under review, PBT jumped 67% to RM217.15m, on the back of 28% increase in revenue. Plantation division recorded a 73% increase in PBT in FY11, on higher average CPO and PK prices of RM3,237/MT (+22%YoY) and RM2,226/MT (+55%YoY) respectively. An increase in CPO and PK production by 11% and 8% respectively also contributed to the better earnings. Revenue contribution from the healthcare division rose by 16%, mainly due to an additional RM6m of revenue from the recently acquired TDMC Hospital Sdn Bhd and an 8% growth in revenue from the existing 3 hospitals. The discontinued division ' food division also recorded profit of RM0.6m compared to loss of RM1.1m last year.

On a yearly basis, 4Q revenue of RM135.42m was 4% higher, whilst PBT rose 32% to RM65.0m. The better results were mainly due to a 10% growth in CPO and PK production coupled with higher commodity prices as well as additional revenue of RM2.4m from newly acquired hospital. On a QoQ basis, 4Q results were lower than 3Q results on seasonal factor for plantation division and lower commodity prices QoQ. PBT dipped 9% from RM71.0m while revenue was 11% lower. EPS was 13.86sen compared to 12.72sen in 1Q11.

New land for hospital TDM's Kuala Terengganu Specialist Hospital, equipped with 33 beds, a 2-bedded ICU and 2 operating theatres, has reached its maximum capacity. The group has recently clinched a deal with Lembaga Tabung Amanah Warisan Negeri Terengganu to buy a piece of land for RM16.9m. The purchase will be fully funded via new share issuance at RM4.75 apiece. The land, measuring 23,424 sq meter, will be developed into an 8-storey special private hospital building with an estimated cost of RM187m. The new hospital is expected to complete in 2 years. The new hospital will be equipped with 130 beds, 5 operating theatres, a 12-bedded intensive care unit, and 1'' storey basement car park. Other facilities including polyclinics, in-patients beds and emergency services.

Recommendation
TDM stock of RM4.67 exceeded our previous target price. We are introducing our FY13 forecast with a higher target price of RM5.30, based on the two-stage DDM method. BUY recommendation maintained. Valuations remain attractive, with a cheap PER of 7.5-7.6x for FY12 and FY13, coupled with a decent dividend yield of 5.4-6.4%.


Source:Jupiter Securities Research 28 February 2012