Stock Name: APM
Company Name: APM AUTOMOTIVE HOLDINGS BHD
Research House: INTER PACIFIC
APM Automotive Holdings Bhd
(May 27, RM4.20)
Reiterate outperform at RM4.31 with revised target price of RM5: We tweaked upwards our FY10 earnings estimate by 43.4% and introduced our FY11 forecasts. We reiterate outperform and revised our target price to RM5 (RM4.30 previously) based on FY10 forecast EPS of 54.7 sen and PER of 9.1 times. We remain positive on APM given their solid strong free cash flow, attractive dividends and a solid balance sheet amid resilient net cash position which stands at RM1.40 per share as at March 31, 2010. Key risks include: (1) economic recovery slowdown; (2) lower-than-expected industry vehicle sales volumes; and (3) weakening ringgit.
APM's annualised 1QFY10 net profit of RM25.9 million is above our expectation and consensus, which accounts for 35.6% and 28.8% of our full year forecast and market consensus respectively. As expected, no dividend was declared for the quarter under review.
For 1QFY10, net profit grew significantly by 151.8% year-on-year (y-o-y) on the back of strong revenue growth, up 49.4% y-o-y. The remarkable performance was driven by: (1) higher production volume and economies of scale; (2) better selling prices; and (3) strengthening of functional currencies against the major trading currencies which effectively lowered the import materials cost. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin rose by 5.1 percentage points to 16.4% in 1QFY10, despite higher operating cost, up 41% y-o-y in 1QFY10.
In the domestic operations, the total vehicle production (TIP) rose by 25.6% y-o-y to 143,147 units in 1QFY10. Meanwhile, their original equipment manufacturer (OEM) revenue surged by 66.5%, thanks to the higher supply of interior and plastic car parts to the newly launched national model like Perodua MPV, Alza. Perodua will increase the production of Alza by 50% to 6,000 units per month in 2HCY10. Additionally, Perodua car sales in March posted at 18,500 units, which bring its 1QCY10 sales to 47,755 units. If we annualise the total FY10 sales, it will be at 191,000 units, which is about 9% higher than Perodua's own projection of 176,000 units. As for their overseas operations, revenue and PBT improved significantly, up 106.9% y-o-y and 1609.9% y-o-y in 1QFY10 due to higher demand for new vehicles from Indonesia. ' Inter-Pacific Research Sdn Bhd, May 27
This article appeared in The Edge Financial Daily, May 27, 2010.
Company Name: APM AUTOMOTIVE HOLDINGS BHD
Research House: INTER PACIFIC
APM Automotive Holdings Bhd
(May 27, RM4.20)
Reiterate outperform at RM4.31 with revised target price of RM5: We tweaked upwards our FY10 earnings estimate by 43.4% and introduced our FY11 forecasts. We reiterate outperform and revised our target price to RM5 (RM4.30 previously) based on FY10 forecast EPS of 54.7 sen and PER of 9.1 times. We remain positive on APM given their solid strong free cash flow, attractive dividends and a solid balance sheet amid resilient net cash position which stands at RM1.40 per share as at March 31, 2010. Key risks include: (1) economic recovery slowdown; (2) lower-than-expected industry vehicle sales volumes; and (3) weakening ringgit.
APM's annualised 1QFY10 net profit of RM25.9 million is above our expectation and consensus, which accounts for 35.6% and 28.8% of our full year forecast and market consensus respectively. As expected, no dividend was declared for the quarter under review.
For 1QFY10, net profit grew significantly by 151.8% year-on-year (y-o-y) on the back of strong revenue growth, up 49.4% y-o-y. The remarkable performance was driven by: (1) higher production volume and economies of scale; (2) better selling prices; and (3) strengthening of functional currencies against the major trading currencies which effectively lowered the import materials cost. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin rose by 5.1 percentage points to 16.4% in 1QFY10, despite higher operating cost, up 41% y-o-y in 1QFY10.
In the domestic operations, the total vehicle production (TIP) rose by 25.6% y-o-y to 143,147 units in 1QFY10. Meanwhile, their original equipment manufacturer (OEM) revenue surged by 66.5%, thanks to the higher supply of interior and plastic car parts to the newly launched national model like Perodua MPV, Alza. Perodua will increase the production of Alza by 50% to 6,000 units per month in 2HCY10. Additionally, Perodua car sales in March posted at 18,500 units, which bring its 1QCY10 sales to 47,755 units. If we annualise the total FY10 sales, it will be at 191,000 units, which is about 9% higher than Perodua's own projection of 176,000 units. As for their overseas operations, revenue and PBT improved significantly, up 106.9% y-o-y and 1609.9% y-o-y in 1QFY10 due to higher demand for new vehicles from Indonesia. ' Inter-Pacific Research Sdn Bhd, May 27
This article appeared in The Edge Financial Daily, May 27, 2010.
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