Stock Name: DELLOYD
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(Aug 26, RM3)
Maintain buy at RM3.30 with target price of RM3.90: Delloyd Ventures (DV) posted a strong quarter with a net profit of RM10.2 million (quarter-on-quarter: 25%, year-on-year: 4%, year-to-date: 31%) on the back of revenue of RM90 million (q-o-q: 12%, y-o-y: 30%, YTD: 26%). For 1H, numbers were well within our estimates (but above consensus) although revenue slipped by 9% when annualised, partly due to the lower output and yield fetched for 1H. Revenue from the auto side remained strong q-o-q, y-o-y and YTD while contributions from the plantation side were only weaker y-o-y as the heavy rainfall in Indonesia put pressure on output and yields despite better fresh fruit bunch (FFB) prices. The associate side saw a q-o-q jump of 323% thanks to the higher number of lamps and mirrors produced ahead of the rush in festive season orders.
Overall, margins have continued to improve, notably on the auto side given the improved production efficiencies thanks to the higher output, while vehicle distribution has been able to break even since 1Q. For the quarter under review, however, the plantation segment saw margins dropping due to the initial setup costs of its crude palm oil (CPO) mill. However, we expect this to reverse over 2H as yields are expected to increase and the setup of the mill will facilitate DV in the sale of CPO (earlier FFB only) which will command a higher margin.
We expect the automotive division from the Malaysia side to be relatively weaker into 2H but this will be well compensated by the higher contribution from the plantation segment as yields rise. DV is also expected to see more contributions from the bus segment as more buses are due for delivery over 2H. It was also reported that DV is bringing a lower decked version of its Komodo buses to Malaysia for a trial run. If this is successful, chances are that more buses will be secured. We opine that manufacturing will likely stay in Indonesia as setting up a new production line here may not be deemed feasible. ' OSK Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(Aug 26, RM3)
Maintain buy at RM3.30 with target price of RM3.90: Delloyd Ventures (DV) posted a strong quarter with a net profit of RM10.2 million (quarter-on-quarter: 25%, year-on-year: 4%, year-to-date: 31%) on the back of revenue of RM90 million (q-o-q: 12%, y-o-y: 30%, YTD: 26%). For 1H, numbers were well within our estimates (but above consensus) although revenue slipped by 9% when annualised, partly due to the lower output and yield fetched for 1H. Revenue from the auto side remained strong q-o-q, y-o-y and YTD while contributions from the plantation side were only weaker y-o-y as the heavy rainfall in Indonesia put pressure on output and yields despite better fresh fruit bunch (FFB) prices. The associate side saw a q-o-q jump of 323% thanks to the higher number of lamps and mirrors produced ahead of the rush in festive season orders.
Overall, margins have continued to improve, notably on the auto side given the improved production efficiencies thanks to the higher output, while vehicle distribution has been able to break even since 1Q. For the quarter under review, however, the plantation segment saw margins dropping due to the initial setup costs of its crude palm oil (CPO) mill. However, we expect this to reverse over 2H as yields are expected to increase and the setup of the mill will facilitate DV in the sale of CPO (earlier FFB only) which will command a higher margin.
We expect the automotive division from the Malaysia side to be relatively weaker into 2H but this will be well compensated by the higher contribution from the plantation segment as yields rise. DV is also expected to see more contributions from the bus segment as more buses are due for delivery over 2H. It was also reported that DV is bringing a lower decked version of its Komodo buses to Malaysia for a trial run. If this is successful, chances are that more buses will be secured. We opine that manufacturing will likely stay in Indonesia as setting up a new production line here may not be deemed feasible. ' OSK Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Based on the 1st q. report, DV will sure make more than $40m net profit this yr meaning eps of 44cts and pe of 7 only .Moreover, its bus making and oil palm will contribute more next yr...Thus its eps will increase to say 50cts and pe will fall to 6 only !!! meaning that it is one of the cheapest stock in klse. It is another sleeping counter going to wake up..just like what Mamee share has gone up since last year or CI Holding going up recently.
ReplyDeleteBoth were sleeping last time....