October 19, 2010

ZHULIAN - OSK Research: Zhulian's earnings below street forecast

Stock Name: ZHULIAN
Company Name: ZHULIAN CORPORATION BHD
Research House: OSK

KUALA LUMPUR: Zhulian's 9MFY10 revenue grew 4.2% to RM237.7 million while net profit rose 9.5% to RM62.8 million, but OSK Research said these were below its and street earnings forecasts.

OSK Research said on Tuesday, Oct 19 the results were mainly driven by the stronger 1HFY10 numbers, which were boosted by robust business at its Thai unit YTD. 3QFY10 revenue and net profit fell 11.9% and 16.7% respectively on softer demand and the stronger RM against USD.

'We cut our FY10/11 earnings forecast by 17%-21% in line with our house forecast of a stronger RM/USD and weaker sales, which reduces our TP to RM2.36.

'While we maintain a BUY on the stock given the 22% upside, we believe the share price will react negatively to Zhulian's weak 3QFY10 results and poor earnings visibility,' it said.

Zhulian declared a third interim single tier dividend of 3 sen per share.


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