Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: MAYBANK
QL Resources Bhd
(May 24, RM3.30)
Maintain buy, target price RM3.75: QL's 4QFY11 net profit of RM31.6 million (-4.8% year-on-year; +19.3% quarter-on-quarter [q-o-q]) took its FY11 net profit to RM124.5 million (+16.5% y-o-y), which was within our forecast and consensus. FY11 marks the 10th straight year of double-digit net profit growth since its listing in FY00.
We expect another year of strong earnings growth (+30%) premised on the new surimi lines in Surabaya, maturing plantation in Eastern Kalimantan and its palm pellet project.
Livestock farming was the consistent performer. QL's 4Q revenue from livestock farming jumped 16.5% y-o-y and 26.2% q-o-q. Full-year revenue rose 17.3% y-o-y but pretax profit jumped 26.9%. Livestock farming remained the largest contributor to group pretax profit in FY11 at 57%, followed by marine products (39%) and palm oil (3%).
The marine products division suffered a margin decline in 4QFY11 (-5.8 percentage points y-o-y; -4.7 pps q-o-q) due to lower fish meal margins, offsetting higher sales volume of surimi-based products and fish meal.
The palm oil division's FY11 revenue was lifted by higher crude palm oil (CPO) prices of RM2,969 a tonne on average, compared with the average of RM2,355 in FY10. Margins, however contracted 1.3 pps y-o-y, resulting in a 33.9% y-o-y drop in pretax profit due to the La Nina weather phenomenon which affected QL's own fresh fruit bunches production.
The proposed dividend per share of 4.25 sen (FY10: 3.75 sen) is slightly above our forecast of four sen, which represents a dividend payout of 29.8%.
We maintain our 'buy' call on QL, seeing a natural hedge within its integrated basic food divisions which give the group a better position in a competitive environment.
On the back of its steadily growing livestock farming business, QL offers growth on better margins from its marine products manufacturing, CPO milling, and its renewable technology project.
We maintain our above consensus forecasts for FY12 while our discounted cash flow-based target price implies 20.2 times FY12 price-earnings ratio. ' Maybank Investment Bank Research, May 24
This article appeared in The Edge Financial Daily, May 25, 2011.
Company Name: QL RESOURCES BHD
Research House: MAYBANK
QL Resources Bhd
(May 24, RM3.30)
Maintain buy, target price RM3.75: QL's 4QFY11 net profit of RM31.6 million (-4.8% year-on-year; +19.3% quarter-on-quarter [q-o-q]) took its FY11 net profit to RM124.5 million (+16.5% y-o-y), which was within our forecast and consensus. FY11 marks the 10th straight year of double-digit net profit growth since its listing in FY00.
We expect another year of strong earnings growth (+30%) premised on the new surimi lines in Surabaya, maturing plantation in Eastern Kalimantan and its palm pellet project.
Livestock farming was the consistent performer. QL's 4Q revenue from livestock farming jumped 16.5% y-o-y and 26.2% q-o-q. Full-year revenue rose 17.3% y-o-y but pretax profit jumped 26.9%. Livestock farming remained the largest contributor to group pretax profit in FY11 at 57%, followed by marine products (39%) and palm oil (3%).
The marine products division suffered a margin decline in 4QFY11 (-5.8 percentage points y-o-y; -4.7 pps q-o-q) due to lower fish meal margins, offsetting higher sales volume of surimi-based products and fish meal.
The palm oil division's FY11 revenue was lifted by higher crude palm oil (CPO) prices of RM2,969 a tonne on average, compared with the average of RM2,355 in FY10. Margins, however contracted 1.3 pps y-o-y, resulting in a 33.9% y-o-y drop in pretax profit due to the La Nina weather phenomenon which affected QL's own fresh fruit bunches production.
The proposed dividend per share of 4.25 sen (FY10: 3.75 sen) is slightly above our forecast of four sen, which represents a dividend payout of 29.8%.
We maintain our 'buy' call on QL, seeing a natural hedge within its integrated basic food divisions which give the group a better position in a competitive environment.
On the back of its steadily growing livestock farming business, QL offers growth on better margins from its marine products manufacturing, CPO milling, and its renewable technology project.
We maintain our above consensus forecasts for FY12 while our discounted cash flow-based target price implies 20.2 times FY12 price-earnings ratio. ' Maybank Investment Bank Research, May 24
This article appeared in The Edge Financial Daily, May 25, 2011.
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