Journey to Wealth
QL Resources - OUTPERFORM - 23 May 2012
Period 4Q12
Actual vs. Expectations
Full year net profit (NP) of RM132m was in line, making up 96% of both the street's estimate and our forecast of RM138m.
Dividends No dividend was declared in the quarter.
Key Result Highlights
YoY, revenue up by 10% underpinned by higher sales recorded in the integrated livestock farming ('ILF') (+13%), palm oil activities ('POA') (+8%) and marine products divisions ('MPM') (+4%).
The strong growth registered in ILF was mainly due to higher farm products price and higher unit cost of feed raw materials.
A substantial PBT margin expansion was seen in POA, which up by 2.4ppt to 3.7% in FY12, has cushioned the margins squeeze in both MPM and ILF divisions. The improved PBT margin in POA was mainly attributed to higher contribution from its own estates and associate companies.
However, higher depreciation and effective tax have dragged down the group's FY12 NP margin by 0.2ppt to 6.8% to RM132m (+6% YoY).
Overall performance for the year was not exciting as the mid-single digit NP growth rate was on the lower end as compared to the double digits YoY growth rate in previous years.
Outlook Nonetheless, we continue to like QL Resources for its leadership in the MPM and livestock businesses, and its plantation division is starting to bear fruits.
Change to Forecasts
Maintained FY13-14E NP forecast of RM168mRM196m.
Rating MAINTAIN OUTPERFORM
Valuation Our target price for the stock is retained at RM3.68 based on 18.5x PER over FY13 FD EPS of 19.9sen.
Risks The global economic and weather uncertainty could affect the earnings of the company.
Source: Kenanga
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