Stock Name: NTPM
Company Name: NTPM HOLDINGS BHD
NTPM Holdings Bhd
(June 27, 53 sen)
Maintain neutral at 53.5 sen with revised target price 53 sen (from 52 sen): NTPM's FY11 results were within our full-year net profit forecast of RM50.5 million. Revenue grew 9.7% year-on-year to RM420.2 million while net profit dropped 12.2% y-o-y to RM52.1 million. The stronger results were mainly driven by higher selling prices and partially by higher sales of tissue products (+6.3% y-o-y). While its personal care products still account for only 18.5% of full-year sales, this segment recorded a strong 27.3% sales growth y-o-y, bolstered by higher sales as NTPM offers competitive pricing to capture market share. Geographically, local sales jumped by 9.7% while overseas revenue, mainly driven by Singapore sales, grew by 9.5% y-o-y.
FY11 earnings before interest and tax (Ebit) margin came in at 16.5% against 20% in FY10 against a backdrop of higher pulp prices ( about +35% y-o-y), and the use of 100% pure pulp instead of a mix of recycled and pure pulp for NTPM's pocket and facial tissue.
NTPM's tissue product manufacturing utilisation rate is about 80% currently. To further boost sales of its tissue products, the main driver of group revenue, we think that NTPM would need to ramp up the number of manufacturing lines, or even consider acquiring another tissue manufacturer, to defend its lion's share of the tissue market of more than 60% in Malaysia. Although its personal care products are gaining market share, we understand that competition in this segment is intense while its overseas sales are still small.
Although the results are in line, we cut our FY12 earnings forecast by 15.8% to RM49.6 million on sticky high pulp prices and higher utility costs as electricity rates for industrial use have increased by an average 8.35% since June 2011. Our fair value, however, is moved up to 53 sen, which pegs NTPM at a higher price-earnings ratio of 12 times (10 times previously). This is because we think that given its dominant 60% share of the local tissue market and decent dividend yield of more than 5%, NTPM deserves a higher valuation. Despite lower profit, the company declared a total single-tier dividend per share of 2.9 sen, more than a 60% payout ratio. ' OSK Research, June 27
This article appeared in The Edge Financial Daily, June 28, 2011.
Company Name: NTPM HOLDINGS BHD
| Research House: OSK | Price Call: HOLD | Target Price: 0.53 |
NTPM Holdings Bhd
(June 27, 53 sen)
Maintain neutral at 53.5 sen with revised target price 53 sen (from 52 sen): NTPM's FY11 results were within our full-year net profit forecast of RM50.5 million. Revenue grew 9.7% year-on-year to RM420.2 million while net profit dropped 12.2% y-o-y to RM52.1 million. The stronger results were mainly driven by higher selling prices and partially by higher sales of tissue products (+6.3% y-o-y). While its personal care products still account for only 18.5% of full-year sales, this segment recorded a strong 27.3% sales growth y-o-y, bolstered by higher sales as NTPM offers competitive pricing to capture market share. Geographically, local sales jumped by 9.7% while overseas revenue, mainly driven by Singapore sales, grew by 9.5% y-o-y.
FY11 earnings before interest and tax (Ebit) margin came in at 16.5% against 20% in FY10 against a backdrop of higher pulp prices ( about +35% y-o-y), and the use of 100% pure pulp instead of a mix of recycled and pure pulp for NTPM's pocket and facial tissue.
NTPM's tissue product manufacturing utilisation rate is about 80% currently. To further boost sales of its tissue products, the main driver of group revenue, we think that NTPM would need to ramp up the number of manufacturing lines, or even consider acquiring another tissue manufacturer, to defend its lion's share of the tissue market of more than 60% in Malaysia. Although its personal care products are gaining market share, we understand that competition in this segment is intense while its overseas sales are still small.
Although the results are in line, we cut our FY12 earnings forecast by 15.8% to RM49.6 million on sticky high pulp prices and higher utility costs as electricity rates for industrial use have increased by an average 8.35% since June 2011. Our fair value, however, is moved up to 53 sen, which pegs NTPM at a higher price-earnings ratio of 12 times (10 times previously). This is because we think that given its dominant 60% share of the local tissue market and decent dividend yield of more than 5%, NTPM deserves a higher valuation. Despite lower profit, the company declared a total single-tier dividend per share of 2.9 sen, more than a 60% payout ratio. ' OSK Research, June 27
This article appeared in The Edge Financial Daily, June 28, 2011.
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