2Q20 - revenue up 11.3%, core net profit up 12.1%

SAMEE 2Q20 posted higher revenue of RM210.5m (yoy:+11.3%, qoq:+7.8%) with higher PAT of RM20.6m (yoy:+12.1%, qoq:+12.9%). 2Q20 result within expectation, six monthly cumulative result accounted for 47.1% and 45.9% of our FY20 full year revenue and earnings estimates respectively.

Aerospace Segment - revenue up 3.4% and PBT up 13.5% yoy

Aerospace revenue increase by RM4.0m or 3.4% yoy, due to increase sales of casing products for A320neo, B737max and business jets, as well as increase in sales of aerostructures products for A320neo and favorable foreign exchange translation. With the higher revenue, PBT increase by RM1.6m or 13.5% to RM13.5m.

Equipment Segment revenue up 23.8%, PBT up 2.0% yoy

Equipment segment revenue increase by RM17.3m (yoy:+10.2, qoq:+18.4%), however PBT only increase by RM0.2m (yoy:+2.0%,qoq:+13.0%), earnings offsetted by unfavorable sales mix and unfavorable foreign exchange movement.

Maintain BUY with unchanged TP of RM11.30

Management expect revenue for aerospace segment to remain relatively stable while revenue from the equipment segment to increase next quarter backed by orders from both semiconductor and data storage customers. We maintained our BUY recommendation with unchanged TP of RM11.30 based on 18x on our estimated EPS for FY20F.

Source: Mercury Research - 29 Nov 2019