• 1HFY17 results within expectation

• Better second half expected

• 2Q revenue and profit +30% and +75% yoy respectively

• Maintain Neutral and TP of RM2.49

1HFY17 results within expectation. P.I.E. Industrial Bhd’s (PIE) net profit came in largely within expectation at 40% of our full year forecast. Its first half net profit made up 36.5% of consensus’ estimates. We expect the Company to register higher orders in the second half as there was a shortage of raw material supply in the market in the first half.

2Q revenue and profit +30% and +75% yoy respectively. Yoy, revenue is up by +30% to RM176.07m while profit jumped by +75% to RM10.70m. Qoq, topline is up by 8.8% while net profit slipped by 7.6% due to forex losses and higher provision for doubtful debts.

PBT margin +1.86ppt yoy but -2.24ppt qoq. PBT margin registered 7.72% during the quarter due to reasonably better scale compared with last year but fell by 2.24ppt qoq due to forex losses and higher provision for doubtful debts.

Cash level declined but balance sheet is still healthy. PIE’s cash pile has dropped from RM103.9m as of Dec 31, 2016 to RM80.7m as of June 30, 2017. Meanwhile, borrowing is low at only RM5.0m, indicating a net cash position and healthy balance sheet. This is partially due to an absence of a disposal in other investment which amounted to RM14.8m.

Maintain Neutral and TP of RM2.49. We make no changes to our earnings estimates as we anticipate second half to be stronger than first half. We value PIE at an unchanged 15x PER based on FY18 EPS of 16.62 sen.

Source: MIDF Research - 8 Aug 2017