CEASE COVERAGE

Period
2Q12/1H12

Actual vs. Expectations  
The reported 1H12 revenue and net profit of RM53.0m and RM6.0m were in line with our expectations, making up 54.1% and 46.9% of our full year estimates.

Dividends
No dividend was declared for the quarter.

Key Result Highlights  

• YoY, 2Q12 revenue increased 19.3% on the back of higher sales registered from all regions except Oceania. In particular, the turnover was driven by a 53.9% rise in Asia ex-Malaysia and a 22.1% rise in North America while Oceania saw a 17.9% decline.  
• Similarly, a stronger net profit in 2Q12 (+39.7% YoY) was also recorded as a result of higher sales generated and favourable RM/USD exchange rates, as well as, margin improvement of 1.9ppt to 13.3%.  
• On a QoQ basis, the PBT surged by 91.1% while net profit rose 88.5%. The increases were due to lower advertisement and promotional expenses as well as higher sales generated. 

Outlook
Although 2Q12 showed a strong set of results, historical trends indicate that quarterly earnings are extremely volatile, and we think it maybe due to 1) certain region's lack of operational efficiency, particularly in emerging markets; 2) currency fluctuations.

Rating 
CEASE COVERAGE as a result of lack of consistent quarterly earnings delivery and continuous UNDERPERFORM recommendation since Nov-11. Our previous TP of RM0.86 was based on 8.9x Fwd PER.

Risks
Implementation of QE3 and RM/USD volatility

Source: Kenaga