NTPM’s  1HFY14  results  were  in  line  with  our  expectations.  Sales  and earnings grew  7.8%  and  24.5%  y-o-y respectively,  mainly driven by  an increase in sales of tissue  products  and baby diapers in the domestic market.    We  like  the  group,  given  its  strong  growth  potential  and upcoming expansion in Vietnam.  Thus, we maintain our BUY  call with a higher FV of MYR0.87 (from MYR0.73), based on 15.5x FY15F EPS.

• On  track.  NTPM’s  1HFY14  revenue  and  net  profit  increased  by  7.8% and  24.5%  y-o-y  respectively  due  to  better  performances  across  the board.  Results  were  well  within  our  expectations,  representing  50%  of our full-year forecast.  Sales from the  paper segment improved by  4% yo-y, thanks to higher demand for tissue products in the domestic market, while  stronger  sales  of  personal  care  products  (+18.7%  y-o-y)  were spurred by increased demand for baby diapers. The period saw stronger PBT growth from  NTPM’s  paper products (+11.5% y-o-y) and personal care  (+54.3%)  segments.  Vis-à-vis  2QFY13,  sales  and  earnings  were stronger by 7.1% and 30.3% y-o-y,  buoyed by  improved  performance in both segments.
• Stronger margin. EBIT and PBT margins trended higher by 1.2ppts and 1.3ppts  y-o-y.  Paper  products’  PBT  margin  increased  to  16.4%  from 15.3%  (+1.1%  y-o-y),  while  the  personal  care  segment  saw  margins rising  to  10.7%  from  8.2%  (+2.5%  y-o-y),  both  backed  by  solid  sales growth.
• Key risks. The key risks include volatile raw material prices and weaker demand.  We  are  leaving  our  forecasts  unchanged  given  that  NTPM’s results were in line with our expectations.
• Maintain BUY.  We  believe the group is on track to deliver satisfactory results,  given  its  upcoming  expansion  into  Vietnam  and  strong  growth from its baby diapers unit. We maintain our BUY call, with our FV lifted to MYR0.87  (from MYR0.73),  pegged to a higher P/E  of 15.5x FY15  EPS (from  13x).  The target P/E  is at a  15% discount  to the  18.3x  weighted average P/E of its regional peers.

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SWOT Analysis

Company Profile
NTPM is principally involved in the manufacture of tissue and personal care products.

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Source: RHB