FY21 results came in well within expectations, with earnings recovered thanks to increased economic activities during the year. With the easing of movement restrictions, the group should continue seeing a gradual recovery of its sales volumes. However, the Omicron variant coupled with the rising Covid-19 cases could pose some risk should movement restrictions be reimposed. Maintain MP with higher TP of RM20.10.

FY21 within expectations. FY21 core net profit of RM548m came in well within expectations at 100%/96% of our/consensus full-year earnings estimates. Announced interim dividend of 26.0 sen per share is also deemed to be within expectation – bringing full-year dividends to 70.0 sen per share.

An overall better set of results. Sequentially, 4QFY21 saw improved earnings, thanks to the improved sales volumes following the lifting of interstate travel ban in Oct 2021. Meanwhile, FY21 earnings almost doubled YoY, with the group enjoying higher product prices, while volumes stayed marginally flattish YoY (-2%).

Sales volumes dependent on movement restriction easing. With the easing of movement restrictions country-wide, PETDAG should see continued recovery in its sales volumes. However, with that said, given the emergence of the Omicron variant coupled with the rising number of Covid-19 cases in the country, any reimposition of movement restrictions would pose a risk to current sales and earnings projections.

Maintain MARKET PERFORM, with a higher TP of RM20.10 (from RM18.90 previously), as we roll forward our valuation base-year, pegged to an unchanged PER of 26x – broadly in-line with the group’s mean valuation. Post results, we made no changes to our FY22E numbers, while introducing new FY23E numbers.

Source: Kenanga Research - 23 Feb 2022