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Apex Healthcare Bhd - FY12 Performance In Line

kiasutrader
Publish date: Thu, 28 Feb 2013, 09:54 AM

Apex Healthcare Bhd (AHB)'s FY12 results were largely within our expectations, with its revenue of RM302.6m accounting for about 98.2% of our  full-year  estimate.  FY12  PBT  came  in  at  RM42.4m  (+18.4%  y-o-y),  on  the  back  of  an  8.9%  revenue  increase  to  RM398.6m.  The  group's stronger  performance  was  bolstered  by  its  manufacturing  (+6.8%  y-o-y)  and  wholesale  &  distribution  (+12.3%  y-o-y)  segments.  The  local market  continued  to  be  supported  by  its  key  products  -  cough  mixtures  and  cardiovascular  products,  while  its  wholesale  &  distribution segment was buoyed by strong sales from the pharmaceutical and consumer products division. All in, we are leaving our FY13 forecasts and RM4.10 FV unchanged, based on its 10-year average PER of 10.0x. Maintain NEUTRAL.  

In line. AHB's FY12 results were in line with our expectations, with revenue and PBT accounting for about 99.4% and 94.3% respectively of our full-year  estimates.  FY12  PBT  came  in  at  RM42.4m  (+18.4%  y-o-y),  on  the  back  of  an  8.9%  increase  in  revenue  to  RM398.6m.  The  group's stronger performance was bolstered by the manufacturing (+6.8% y-o-y) and wholesale & distribution (+12.3% y-o-y) segments. Nevertheless, its net profit inched up a marginal 3.6% y-o-y to RM29.0m, mainly due to the recognition of RM2.5m capital gains tax incurred in FY12 upon the completion of the disposal of its China investment in Ziamen Maidiken Science and Technology Co Ltd, as well as a higher effective tax rate of 31.4%  for  FY12.  While the group's 4QFY12 revenue was relatively flat at  RM96.0m,  its  PBT  grew 13.1%  q-o-q  to RM9.9m,  primarily  driven  by lower operating costs and a better sales mix. 

Double-digit growth in PBT. The manufacturing arm's FY12 revenue reached RM90.5m, boosted by strong local and selected export markets, while  its  PBT  climbed  11%  y-o-y.  On  the  local  front,  sales  to  private  sector  pharmacies  surged  28%  y-o-y,  with  cough  mixtures  and cardiovascular  products  being  the  top  sales  contributors.  The  exports  market  was  supported  by  its  Singapore  (+32.0%  y-o-y)  and  Myanmar divisions, the latter saw sales jumping by more than one-fold. The wholesale & distribution arm reported a 12% y-o-y sales growth, while its PBT expanded by 26% y-o-y, backed by strong sales performance in pharmaceutical and consumer products divisions. The group's continued efforts to drive up profit contribution from its own brands are paying off, as sales of its AVO brand products such as Avonac SR 100mg and Clavomax 625mg Tablet had improved.

Final dividend proposed. The company proposed a final gross dividend of 6 sen less 25% tax and a special tax-exempted dividend of 5 sen per share for FY12 (FY11: final gross dividend of 5 sen less 25% tax and a special tax-exempted dividend of 5 sen per share). This brought to a total gross dividend per share of 18.25 sen per share or gross dividend yield of 4.4% (net dividend per share of 14 sen, net dividend yield of 3.4%) for FY12.

Maintain NEUTRAL, RM4.10 FV. AHB's balance sheet remains solid, with net cash per share of 37.0 sen as at end-December 2012. For now, its manufacturing and wholesale & distribution businesses are its bread and butter, while its orthopaedic manufacturing business is set to be the next growth engine in the near future. All in, we are leaving our forecasts unchanged. Maintain NEUTRAL on Apex, with a FV of RM4.10, pegged to a PER of 10x.
Source: OSK
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