Stock Name: KULIM
Company Name: KULIM (M) BHD
Research House: INTER PACIFIC
Kulim (M) Bhd
(May 31, RM7.32)
Reiterate outperform at RM7.32 with target price of RM9: We reiterate outperform with our target price at RM9 based on sum-of-parts valuation. We find Kulim attractive in view of its more attractive PER of 10.1 times vis-a-vis its peers of similar size. As expected, Kulim did not declare any dividend for the quarter.
Kulim's profit before tax (PBT) result of RM165.9 million is fairly in line with our expectation, accounting for 22.7% of our FY10 estimation. We are confident that our forecast revenue and PBT of RM6.9 billion and RM731.1 million will be realised as historically, result will pick up during 2HFY10.
1QFY10 revenue grew by 14.4% year-on-year (y-o-y) to RM1.5 billion supported from all their business segments with the exception of shipping services which posted negative growth. Revenue from food and restaurant services via QSR Brands Bhd grew by 14.3% y-o-y to RM724.7 million, while plantation revenue rose by 16.4% y-o-y following a 24.8% y-o-y gain from Malaysia and 13.1% y-o-y gain from Solomon Islands respectively.
Their palm oil production in Malaysia which rose 8% y-o-y to 36,300 tonnes in 1QFY10 was due to higher OER yield of 20.6%, up 0.6 percentage point from 1QFY09. This, together with higher average CPO selling price of RM2,455 per tonne (RM1,904 per tonne in 1QFY09) saw its profit from Malaysia doubled to RM32.2 million in 1QFY10 (1QFY09: RM16.2 million).
Revenue from their subsidiary plantation business ie New Britain Palm Oil (NBPOL) which grew 13.1% y-o-y growth in 1QFY10 was due to higher fresh fruit bunches (FFB) production (+2% y-o-y) and average CPO selling price of US$767 (+2.7% y-o-y).
Manufacturing business led by Natural Oleo Chemicals posted a profit of RM14.3 million from a loss of RM31 million in 1QFY09. This was due to their oleochemical business that recorded higher revenue of RM277.6 million in 1QFY10 or up 16.2% y-o-y after revenue was hit from cancellation of contracts in 1QFY09. Excluding translation gain of RM19.8 million, the manufacturing segment will be in negative of RM5.5 million in 1QFY10, a much smaller loss in comparison to RM31 million in 1QFY09 and RM11 million in 4QFY09. ' Inter-Pacific Research Sdn Bhd, May 31
This article appeared in The Edge Financial Daily, June 1, 2010.
Company Name: KULIM (M) BHD
Research House: INTER PACIFIC
Kulim (M) Bhd
(May 31, RM7.32)
Reiterate outperform at RM7.32 with target price of RM9: We reiterate outperform with our target price at RM9 based on sum-of-parts valuation. We find Kulim attractive in view of its more attractive PER of 10.1 times vis-a-vis its peers of similar size. As expected, Kulim did not declare any dividend for the quarter.
Kulim's profit before tax (PBT) result of RM165.9 million is fairly in line with our expectation, accounting for 22.7% of our FY10 estimation. We are confident that our forecast revenue and PBT of RM6.9 billion and RM731.1 million will be realised as historically, result will pick up during 2HFY10.
1QFY10 revenue grew by 14.4% year-on-year (y-o-y) to RM1.5 billion supported from all their business segments with the exception of shipping services which posted negative growth. Revenue from food and restaurant services via QSR Brands Bhd grew by 14.3% y-o-y to RM724.7 million, while plantation revenue rose by 16.4% y-o-y following a 24.8% y-o-y gain from Malaysia and 13.1% y-o-y gain from Solomon Islands respectively.
Their palm oil production in Malaysia which rose 8% y-o-y to 36,300 tonnes in 1QFY10 was due to higher OER yield of 20.6%, up 0.6 percentage point from 1QFY09. This, together with higher average CPO selling price of RM2,455 per tonne (RM1,904 per tonne in 1QFY09) saw its profit from Malaysia doubled to RM32.2 million in 1QFY10 (1QFY09: RM16.2 million).
Revenue from their subsidiary plantation business ie New Britain Palm Oil (NBPOL) which grew 13.1% y-o-y growth in 1QFY10 was due to higher fresh fruit bunches (FFB) production (+2% y-o-y) and average CPO selling price of US$767 (+2.7% y-o-y).
Manufacturing business led by Natural Oleo Chemicals posted a profit of RM14.3 million from a loss of RM31 million in 1QFY09. This was due to their oleochemical business that recorded higher revenue of RM277.6 million in 1QFY10 or up 16.2% y-o-y after revenue was hit from cancellation of contracts in 1QFY09. Excluding translation gain of RM19.8 million, the manufacturing segment will be in negative of RM5.5 million in 1QFY10, a much smaller loss in comparison to RM31 million in 1QFY09 and RM11 million in 4QFY09. ' Inter-Pacific Research Sdn Bhd, May 31
This article appeared in The Edge Financial Daily, June 1, 2010.
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