Journey to Wealth
Ann Joo Resources - 1H12 below expectations
Period 2QFY12/1HFY12
Actual vs. Expectations
Below ours and the consensus expectations.
The company reported a core net profit of RM21.8m (after adding back an unrealised foreign exchange loss of RM27.8m), which only made up around 21% and 24% of our FY12 fullyear estimate of RM106.1m and the consensus' forecast of RM89.3m respectively.
Dividends No dividend was declared.
Key Result Highlights
QoQ, 2Q12 core earnings jumped by 278% to RM17.3m from RM4.6m in 1Q12. This was mainly due to the higher recognition of initial start-up cost for its blast furnace operations in 1Q12.
YoY, the revenue grew by 9% although its core net profit fell by 47% from RM32.7m. This was due to a lower core net margin of 2.9% (2Q11: 5.8%) attributable to a lower utilisation rate and higher operating expenses.
YoY, the core net profit declined by 71% due to the higher prices of raw materials, which eroded its margins.
Outlook Global industry uncertainties remain as the main challenge for Ann Joo as the global steel industry growth is expected to be lacklustre due to an oversupply situation and also a slower demand growth from China.
Nonetheless, the domestic steel demand is supported by the execution of sizeable projects and hence, we reckon that there will be spillover demands from potential projects such as MRT, conveyor belt and jetty portion of the Vale site, Manjung expansion as well as the Iskandar project in Johor Bahru, which should benefit Ann Joo's topline in 2H12.
Change to Forecasts
However, we have cut our FY12-13E estimates by 28% and 26%, to RM76.0m and RM98.1m, respectively, as we assumed higher scrap prices and operating cost.
Rating Downgraded to UNDERPERFORM
Valuation We revised our target price lower to RM1.32 (RM1.62 previously) after our earnings adjustments above and a rollover of the valuation to FY13E with 7.0x PER.
Risks Volatile scrap prices and slower than expected global demand.
Source: Kenanga
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
Market Buzz
2024-11-21
ANNJOO
2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOO2024-11-12
ANNJOOMore articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Introducing MY's First IPO Fund for Sophisticated Investors!
New Update. Discover investment communities that resonate with your ideas
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
Apps
Top Articles
1
save malaysia!
Visa-free travel to China extended for Malaysians to 30 days
2
3
Koon Yew Yin's Blog
CPO price is rising rapidly as shown by chart below - Koon Yew Yin
4
Axcapital's investment blog
KAB - Executing its way to a record quarter. Could more Petronas contracts be coming?
6
7
8
BFM Podcast
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
