Stock Name: JTINTER
Company Name: JT INTERNATIONAL BHD
Research House: MAYBANK
JT International Bhd (JTI)
(May 14, RM5.39)
Maintain buy at RM5.36 with higher target price of RM6: A solid 14% year-on-year (y-o-y) bottom line growth reinvigorates our bullish outlook on the stock. We have raised 2010-2012 forecasts by 6%-8% on an industry sales volume growth of 2% (from -2%).
We maintain our buy call with a higher discounted cash flow-based (DCF) target price of RM6.
2010 started off in line with our and consensus forecasts, with 1QFY10 net profit of RM37.8 million (+14.4% y-o-y, +103.2% quarter-on-quarter, or q-o-q) forming approximately 30% and 31% of full-year estimates respectively. The commendable results came from sales growth (+7.4% y-o-y, +3.9% q-o-q) coupled with lower depreciation, operating and marketing expenses.
Encouraging volume growth returned in 1QFY10, underpinning our market contrarian +2% volume growth forecast for the industry in 2010. Note however that the below 20's packs ban effective June 2010 has already been taken into account to limit further growth in 2H10. Further, the high illicit incidence of above 35% is expected to stagnate and no longer increase.
We prefer JTI for its ability to grow market share and thus sales volume within this volatile industry. With forecast annual double-digit growth over 2010-12, we expect JTI to comfortably outperform index benchmarks.
Our RM6 DCF-based target price assumes conservative assumptions of -0.5% terminal growth and costs growth greater than revenue growth from 2013. ' Maybank IB, May 14
This article appeared in The Edge Financial Daily, May 17, 2010.
Company Name: JT INTERNATIONAL BHD
Research House: MAYBANK
JT International Bhd (JTI)
(May 14, RM5.39)
Maintain buy at RM5.36 with higher target price of RM6: A solid 14% year-on-year (y-o-y) bottom line growth reinvigorates our bullish outlook on the stock. We have raised 2010-2012 forecasts by 6%-8% on an industry sales volume growth of 2% (from -2%).
We maintain our buy call with a higher discounted cash flow-based (DCF) target price of RM6.
2010 started off in line with our and consensus forecasts, with 1QFY10 net profit of RM37.8 million (+14.4% y-o-y, +103.2% quarter-on-quarter, or q-o-q) forming approximately 30% and 31% of full-year estimates respectively. The commendable results came from sales growth (+7.4% y-o-y, +3.9% q-o-q) coupled with lower depreciation, operating and marketing expenses.
Encouraging volume growth returned in 1QFY10, underpinning our market contrarian +2% volume growth forecast for the industry in 2010. Note however that the below 20's packs ban effective June 2010 has already been taken into account to limit further growth in 2H10. Further, the high illicit incidence of above 35% is expected to stagnate and no longer increase.
We prefer JTI for its ability to grow market share and thus sales volume within this volatile industry. With forecast annual double-digit growth over 2010-12, we expect JTI to comfortably outperform index benchmarks.
Our RM6 DCF-based target price assumes conservative assumptions of -0.5% terminal growth and costs growth greater than revenue growth from 2013. ' Maybank IB, May 14
This article appeared in The Edge Financial Daily, May 17, 2010.
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