Period     4QFY13/12MFY13

Actual vs. Expectations   The reported 12MFY13 net profit of RM575.3m (-64% YoY) came in marginally within our forecast. Stripping out the exceptional items of RM379.6m comprising (1) gains from the disposal of Hicom Power Sdn Bhd (RM412.6m), (2) gains on disposal of investment securities and associated company (RM43.6m), (3) gains from the disposal of PPE (RM55.1m), (4) mark-to-market gains (RM7.3m), (5) reversal of provision for major overhauls (RM78.9m), (6) doubtful debts (RM46.4m) and (7) inventories written down (RM13.7m); the 12MFY13 core net profit also came in within our expectations at RM195.7m but 25% below consensus full-year net profit of RM261m.

Dividends    A final dividend of 4.5 (0.5 sen gross and 4 sen tax exempt) sen was proposed.  This brought its FY13 DPS to 6.0 sen (2.0 sen gross and 4 sen tax exempt) 

Key Results Highlights   YoY, the 12MFY13 revenue rose 91% to RM13.1b due to improvements across the board namely automotive (+>100%), services (+1.3%) and property, asset & construction (+56.5%) and was also boosted by the fullyear impact from the consolidation of Proton.  Specifically, in the automotive segment, its vehicle sales were driven by marquee names from Audi (+44%), Honda (+100%), Isuzu (+13%) and Mitsubishi (+11%), which more than offset the lower sales from Proton (-6%) and Suzuki (-7%). In the services segment, revenue growth from banking (+11%) and insurance (+11.3%) offset the lower contribution from concession (-10.6%). Specifically, growth in this segment was driven by Puspakom (+6%) and KL Airport Services (+14%) but negated by Alam Flora (-5%) and Hicom Power (-36%) due to the disposal of its business. 

The 12MFY13 core pre-tax profit rose by 15% (after stripping out the exceptional items totalling RM379.6m and the adjusted negative goodwill (RM1.28b) in 12MFY12 as a result of accounting treatment for the purchase price allocation following the acquisition of Proton). 

QoQ,  the revenue rose 27% to RM2.6b due to improvements across the board namely automotive (+27%), services (+3%) and property, asset & construction (+46%). Excluding the gain in 3Q13 from HICOM Power’s business of RM413m, 4QFY13 registered a profit of RM70.6m as compared to a loss of RM21m in 3QFY12. 

Outlook    Earnings contributions from its RM7.55b AV8X8 contract will start coming in from FY14 onwards while those from the property division are expected to contribute positively as the group plans to launch property development projects with a total gross development value of RM13.3b in 2013-15. 

Change to Forecasts    No changes to our forecasts. 

Rating  Maintain MARKET PERFORM

Valuation     Following some minor fine-tunings, we have upgraded slightly our target price from 2.70 to 2.81 based on SOP.

Risks    Economic uncertainty and a weak consumer sentiment.

Source: Kenanga