Stock Name: BSTEAD
Company Name: BOUSTEAD HOLDINGS BHD
Research House: CIMB
Boustead Holdings Bhd
(May 30, RM5.79)
Maintain hold at RM5.72 with higher target price of RM6.45 (from RM6.06): Although Boustead Holdings' 1Q11 net profit accounted for only 18% of our full-year forecast and 19% of consensus numbers, we regard it as being broadly in line as the remaining quarters should be stronger, buoyed by higher fresh fruit bunches (FFB) production and contribution from the newly-acquired Pharmaniaga Bhd.
A pleasant surprise was the interim single-tier dividend of eight sen which was higher than our forecast of five sen. We raise our FY11 to FY13 dividend forecasts from between 40 sen to 41.2 sen to 42 sen per year but trim our FY11/13 earnings per share (EPS) by between 1% and 4% to account for our recent 10% to 11% downgrade of'' Affin Bank Bhd's numbers. Our target price goes up from RM6.06 to RM6.45 as we update our revised net asset value for the current value of listed assets and include the Royale Chulan Hotel. We continue to rate Boustead a 'hold' as there are no immediate catalysts in sight.
Net profit in 1Q jumped 24% year-on-year to RM112.2 million, mainly because of higher contributions from all the key units with the exceptions of heavy industries and finance. Plantation earnings before interest and tax (Ebit) surged 41% as the 42% rise in crude palm oil price more than offset a 17% drop in FFB crop. Production was affected by seasonality and the prolonged wet weather. Property Ebit rose 42% due to higher progress billings while earnings from manufacturing and trading ticked up 7%, thanks to higher sales volume for petrol retailer, BH Petrol. Heavy industries Ebit fell 28% due to slower progress billings for heavy industries while the finance division was affected by higher interest expense.
In view of Affin's disappointing 1Q results, we cut our FY11/13 EPS for Boustead by between 1% to 4% to account for lower lending yields and the recent interest rate hike. However, we remain optimistic on the group's 2H earnings prospects, which are underpinned by higher FFB production, expansion of the hotel chain and contribution from Pharmaniaga from next quarter onwards. ' CIMB Research, May 30
This article appeared in The Edge Financial Daily, May 31, 2011.
Company Name: BOUSTEAD HOLDINGS BHD
Research House: CIMB
Boustead Holdings Bhd
(May 30, RM5.79)
Maintain hold at RM5.72 with higher target price of RM6.45 (from RM6.06): Although Boustead Holdings' 1Q11 net profit accounted for only 18% of our full-year forecast and 19% of consensus numbers, we regard it as being broadly in line as the remaining quarters should be stronger, buoyed by higher fresh fruit bunches (FFB) production and contribution from the newly-acquired Pharmaniaga Bhd.
A pleasant surprise was the interim single-tier dividend of eight sen which was higher than our forecast of five sen. We raise our FY11 to FY13 dividend forecasts from between 40 sen to 41.2 sen to 42 sen per year but trim our FY11/13 earnings per share (EPS) by between 1% and 4% to account for our recent 10% to 11% downgrade of'' Affin Bank Bhd's numbers. Our target price goes up from RM6.06 to RM6.45 as we update our revised net asset value for the current value of listed assets and include the Royale Chulan Hotel. We continue to rate Boustead a 'hold' as there are no immediate catalysts in sight.
Net profit in 1Q jumped 24% year-on-year to RM112.2 million, mainly because of higher contributions from all the key units with the exceptions of heavy industries and finance. Plantation earnings before interest and tax (Ebit) surged 41% as the 42% rise in crude palm oil price more than offset a 17% drop in FFB crop. Production was affected by seasonality and the prolonged wet weather. Property Ebit rose 42% due to higher progress billings while earnings from manufacturing and trading ticked up 7%, thanks to higher sales volume for petrol retailer, BH Petrol. Heavy industries Ebit fell 28% due to slower progress billings for heavy industries while the finance division was affected by higher interest expense.
In view of Affin's disappointing 1Q results, we cut our FY11/13 EPS for Boustead by between 1% to 4% to account for lower lending yields and the recent interest rate hike. However, we remain optimistic on the group's 2H earnings prospects, which are underpinned by higher FFB production, expansion of the hotel chain and contribution from Pharmaniaga from next quarter onwards. ' CIMB Research, May 30
This article appeared in The Edge Financial Daily, May 31, 2011.
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