Stock Name: QL
Company Name: QL RESOURCES BHD
QL Resources Bhd
(Aug 23, RM2.98)
Maintain buy at RM2.98 with revised target price of RM3.39 (from RM3.75): QL's 1QFY12 results were below consensus and our full-year numbers, with margin contraction seen in the two main divisions. Reported net profit of RM27.8 million (+3.7% year-on-year [y-o-y], -11.9% quarter-on-quarter [q-o-q]) made up 17% and 19% of our and consensus forecasts for FY12. We do expect stronger earnings in the coming quarters and QL remains a 'buy'. Our forecasts are nevertheless revised down on lower margin expectations and our target price is lowered to RM3.39 (-10%).
The marine products (MPM) division underperformed during the quarter as revenue increased just 1.6% y-o-y due to lower fish landings in Sabah and lower fishmeal prices. Pre-tax profit dropped 26% y-o-y due to a 3.9 percentage point contraction in pre-tax margin, due in part to higher raw material costs from poorer fish landings, we believe. MPM contributions to group earnings declined from 46% in 1QFY11 to 31% in 1QFY12.
Revenue grew 10.8% y-o-y to RM235 million but margins were lower for the trading of feed raw materials. Pre-tax, as a result, was flat y-o-y. On a q-o-q basis, revenue dropped 18% because of the exceptionally strong performance of feed raw materials in 4QFY11.
The palm oil division performed fairly well this quarter. Revenue growth of 66% y-o-y and 11% q-o-q was driven mainly by improved crude palm oil prices as well as more fresh fruit bunches processed. Pre-tax profit jumped to RM7.9 million from RM1.1 million in the same period last year, attributable to higher contribution from own estates and new contribution from its 35%-owned associate Boilermech Holdings Bhd.
We have cut our FY12/FY13 forecasts by 12% on imputing lower margins, particularly for the MPM division (by about two percentage points). We nevertheless expect net profit growth to remain healthy at 15% for FY12 and 16.5% for FY13. Our discounted cash flow-based target price of RM3.39 provides a 13% upside from the current share price. ' Maybank IB Research, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
Company Name: QL RESOURCES BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.39 |
QL Resources Bhd
(Aug 23, RM2.98)
Maintain buy at RM2.98 with revised target price of RM3.39 (from RM3.75): QL's 1QFY12 results were below consensus and our full-year numbers, with margin contraction seen in the two main divisions. Reported net profit of RM27.8 million (+3.7% year-on-year [y-o-y], -11.9% quarter-on-quarter [q-o-q]) made up 17% and 19% of our and consensus forecasts for FY12. We do expect stronger earnings in the coming quarters and QL remains a 'buy'. Our forecasts are nevertheless revised down on lower margin expectations and our target price is lowered to RM3.39 (-10%).
The marine products (MPM) division underperformed during the quarter as revenue increased just 1.6% y-o-y due to lower fish landings in Sabah and lower fishmeal prices. Pre-tax profit dropped 26% y-o-y due to a 3.9 percentage point contraction in pre-tax margin, due in part to higher raw material costs from poorer fish landings, we believe. MPM contributions to group earnings declined from 46% in 1QFY11 to 31% in 1QFY12.
Revenue grew 10.8% y-o-y to RM235 million but margins were lower for the trading of feed raw materials. Pre-tax, as a result, was flat y-o-y. On a q-o-q basis, revenue dropped 18% because of the exceptionally strong performance of feed raw materials in 4QFY11.
The palm oil division performed fairly well this quarter. Revenue growth of 66% y-o-y and 11% q-o-q was driven mainly by improved crude palm oil prices as well as more fresh fruit bunches processed. Pre-tax profit jumped to RM7.9 million from RM1.1 million in the same period last year, attributable to higher contribution from own estates and new contribution from its 35%-owned associate Boilermech Holdings Bhd.
We have cut our FY12/FY13 forecasts by 12% on imputing lower margins, particularly for the MPM division (by about two percentage points). We nevertheless expect net profit growth to remain healthy at 15% for FY12 and 16.5% for FY13. Our discounted cash flow-based target price of RM3.39 provides a 13% upside from the current share price. ' Maybank IB Research, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
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