Stock Name: DELLOYD
Company Name: DELLOYD VENTURES BHD
Research House: ALLIANCE
Delloyd Ventures Bhd
(June 1, RM3.50)
Maintain buy at RM3.40 with revised target price of RM5.13 (from RM3.97): Delloyd registered a 43% year-on-year (y-o-y) increase but 9.7% reduction in revenue in the absence of delivery of 25 bus chassis this quarter.
However, the plantation division emerged as the star performer with more than five times y-o-y and 17.9% quarter-on-quarter pre-tax earnings growth on better production yield and higher crude palm oil (CPO) prices.
The results were slightly below our expectation, achieving 93% of our annualised net profit of RM54.9 million with higher stock writeoffs and provisions. Delloyd also declared a final dividend of 10 sen, bringing the full-year dividend to 18 sen or a dividend yield of 5.3%.
The contribution from the plantation division will continue to grow as fresh fruit bunches (FFB) production is envisaged to increase by 23.9% and yield by 5.5% in FY12. Hence, it will overtake the automotive division as the major earnings contributor with an estimated pre-tax contribution of 51% in FY12 ending March from the current 47.5%.
Outlook for the automotive division appears promising as Delloyd has secured contracts to supply parts to the Myvi and Proton Persona replacement models. The company is in the process of tendering to supply 48 buses in FY12 and 50 in FY13, so revenue growth may accelerate further.
Based on new plantation/automotive pre-tax contribution of 49:51 in FY12 (from our earlier assumption of 75:25 for FY11), we raise our target price from RM3.97 to RM5.13 with plantation and automotive business valued at six times and nine times.
We reiterate our 'buy' call for Delloyed with an upside potential of 56.8%. The risks to our recommendation include failure to secure new bus contracts, a sudden drop in demand for motor vehicles and a plunge in CPO prices to below RM3,000 per tonne. ' Alliance Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2011.
Company Name: DELLOYD VENTURES BHD
Research House: ALLIANCE
Delloyd Ventures Bhd
(June 1, RM3.50)
Maintain buy at RM3.40 with revised target price of RM5.13 (from RM3.97): Delloyd registered a 43% year-on-year (y-o-y) increase but 9.7% reduction in revenue in the absence of delivery of 25 bus chassis this quarter.
However, the plantation division emerged as the star performer with more than five times y-o-y and 17.9% quarter-on-quarter pre-tax earnings growth on better production yield and higher crude palm oil (CPO) prices.
The results were slightly below our expectation, achieving 93% of our annualised net profit of RM54.9 million with higher stock writeoffs and provisions. Delloyd also declared a final dividend of 10 sen, bringing the full-year dividend to 18 sen or a dividend yield of 5.3%.
The contribution from the plantation division will continue to grow as fresh fruit bunches (FFB) production is envisaged to increase by 23.9% and yield by 5.5% in FY12. Hence, it will overtake the automotive division as the major earnings contributor with an estimated pre-tax contribution of 51% in FY12 ending March from the current 47.5%.
Outlook for the automotive division appears promising as Delloyd has secured contracts to supply parts to the Myvi and Proton Persona replacement models. The company is in the process of tendering to supply 48 buses in FY12 and 50 in FY13, so revenue growth may accelerate further.
Based on new plantation/automotive pre-tax contribution of 49:51 in FY12 (from our earlier assumption of 75:25 for FY11), we raise our target price from RM3.97 to RM5.13 with plantation and automotive business valued at six times and nine times.
We reiterate our 'buy' call for Delloyed with an upside potential of 56.8%. The risks to our recommendation include failure to secure new bus contracts, a sudden drop in demand for motor vehicles and a plunge in CPO prices to below RM3,000 per tonne. ' Alliance Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2011.
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