Stock Name: AMWAY
Company Name: AMWAY (M) HOLDINGS BHD
Research House: INTER PACIFIC
Amway (Malaysia) Holdings Bhd
(May 20, RM7.45)
Recommend neutral at RM7.35 with target price of RM8.11: The target price is based on 50.7 sen FY10 EPS (earnings per share) and PER (price-earnings ratio) of 16 times. A re-rating is evident on the back of (1) improving consumer sentiment due to better economic outlook; (2) the strengthening ringgit against the US dollar and (3) contribution from their growth plans through higher compensation schemes for distributors, new products and better pricing.
Amway should negate the stiff competition and any potential backlash on consumer spending.
Amway's 1QFY10 earnings of RM175.5 million (+7.1%'' year-on-year) came in within our expectations, representing only 25.5% of our full-year forecast of RM685.7 million and consensus estimates. Its revenue's 7.1% rise y-o-y was due to pre-price increase buying ahead of the distributor price increase effective March 1, 2010.
Profit before tax fell by 14% y-o-y due to higher distribution expenses incurred from consumer access strategies; brand building initiatives and higher purchase price of products. These issues negated its favourable foreign exchange movements and better sales revenue.
1QFY10 earnings before interest and tax (Ebit) margin was lower at 14.8% versus 19.6% in the previous corresponding quarter. On a q-o-q basis, the 1QFY10 revenue and net profit grew at a slower 2.1% and 2.2% respectively.
We expect similar dividend payout of that in FY09 with a total payout of 48 sen net per share in FY10. A first interim dividend of nine sen net per share was declared on May 19, 2010. ' Inter-Pacific Research, May 20
This article appeared in The Edge Financial Daily, May 21, 2010.
Company Name: AMWAY (M) HOLDINGS BHD
Research House: INTER PACIFIC
Amway (Malaysia) Holdings Bhd
(May 20, RM7.45)
Recommend neutral at RM7.35 with target price of RM8.11: The target price is based on 50.7 sen FY10 EPS (earnings per share) and PER (price-earnings ratio) of 16 times. A re-rating is evident on the back of (1) improving consumer sentiment due to better economic outlook; (2) the strengthening ringgit against the US dollar and (3) contribution from their growth plans through higher compensation schemes for distributors, new products and better pricing.
Amway should negate the stiff competition and any potential backlash on consumer spending.
Amway's 1QFY10 earnings of RM175.5 million (+7.1%'' year-on-year) came in within our expectations, representing only 25.5% of our full-year forecast of RM685.7 million and consensus estimates. Its revenue's 7.1% rise y-o-y was due to pre-price increase buying ahead of the distributor price increase effective March 1, 2010.
Profit before tax fell by 14% y-o-y due to higher distribution expenses incurred from consumer access strategies; brand building initiatives and higher purchase price of products. These issues negated its favourable foreign exchange movements and better sales revenue.
1QFY10 earnings before interest and tax (Ebit) margin was lower at 14.8% versus 19.6% in the previous corresponding quarter. On a q-o-q basis, the 1QFY10 revenue and net profit grew at a slower 2.1% and 2.2% respectively.
We expect similar dividend payout of that in FY09 with a total payout of 48 sen net per share in FY10. A first interim dividend of nine sen net per share was declared on May 19, 2010. ' Inter-Pacific Research, May 20
This article appeared in The Edge Financial Daily, May 21, 2010.
No comments:
Post a Comment