Stock Name: UMW
Company Name: UMW HOLDINGS BHD
UMW Holdings Bhd
(Aug 22, RM7.21)
Maintain neutral at RM7.22 with target price of RM7: UMW's annualised 2QFY11 earnings came below our and consensus expectations, accounting for 78.5% and 79.5% of full-year forecasts. A first interim dividend of 10 sen per share was declared during the quarter.
Revenue fell in 2QFY11 by 3.5% year-on-year (-1.7% quarter-on-quarter) to RM3.17 billion and net profit by 38% y-o-y (-13.6% q-o-q) to RM131.2 million. The weak performance was led by its automotive division which was hurt by the earthquake and tsunami in Japan, which affected in Toyota and Perodua's production. The introduction of the amended Hire Purchase (HP) Act in June 2011 slowed down the order taking and delivery processes.
In 2QFY11, UMW's pretax profit from the automotive division was down by 24.1% y-o-y. Toyota vehicle sales slid by 11.8% y-o-y to 20,811 units while its associate Perusahaan Otomobil Kedua Sdn Bhd (Perodua) sales plunged by 28.4% y-o-y to 33,806 units. The overall market share of Toyota and Perodua fell by 5.6 percentage points'' to 42.3% due to the parts supply disruption from the earthquake and tsunami in Japan as well as the introduction of the amended HP Act.
The oil and gas (O&G) division reported a loss of RM23.3 million in 2QFY11 from a profit of RM500,000 in 1QFY11 despite its strongest jump in sales of 89.3% y-o-y. We expect the division to return to the black by end-FY11 given: (i) income from Naga 1, 2 and 3 drilling rigs, (ii) potential new income from new capacity from United Seamless Tubulaar Private Ltd in India; and (iii) WSP Holdings has shown some improvement and has been pursuing new markets in South America.
Perodua has revised its FY11 sales forecast lower to 190,000 from 195,000 units. It expects its sales to improve in 2HFY11 as production volume will normalise along with the newly launched Perodua Myvi in June 2011.
We reiterate our 'neutral' recommendation and maintain our target price at RM7 using sum-of-parts valuation with FY11 price-earnings ratio of 10 times for the auto division, 15 times PER for O&G, nine times PER for equipment and eight times PER for mechanical and electrical. ' MIDF Research, Aug 22
This article appeared in The Edge Financial Daily, August 23, 2011.
Company Name: UMW HOLDINGS BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 7.00 |
UMW Holdings Bhd
(Aug 22, RM7.21)
Maintain neutral at RM7.22 with target price of RM7: UMW's annualised 2QFY11 earnings came below our and consensus expectations, accounting for 78.5% and 79.5% of full-year forecasts. A first interim dividend of 10 sen per share was declared during the quarter.
Revenue fell in 2QFY11 by 3.5% year-on-year (-1.7% quarter-on-quarter) to RM3.17 billion and net profit by 38% y-o-y (-13.6% q-o-q) to RM131.2 million. The weak performance was led by its automotive division which was hurt by the earthquake and tsunami in Japan, which affected in Toyota and Perodua's production. The introduction of the amended Hire Purchase (HP) Act in June 2011 slowed down the order taking and delivery processes.
In 2QFY11, UMW's pretax profit from the automotive division was down by 24.1% y-o-y. Toyota vehicle sales slid by 11.8% y-o-y to 20,811 units while its associate Perusahaan Otomobil Kedua Sdn Bhd (Perodua) sales plunged by 28.4% y-o-y to 33,806 units. The overall market share of Toyota and Perodua fell by 5.6 percentage points'' to 42.3% due to the parts supply disruption from the earthquake and tsunami in Japan as well as the introduction of the amended HP Act.
The oil and gas (O&G) division reported a loss of RM23.3 million in 2QFY11 from a profit of RM500,000 in 1QFY11 despite its strongest jump in sales of 89.3% y-o-y. We expect the division to return to the black by end-FY11 given: (i) income from Naga 1, 2 and 3 drilling rigs, (ii) potential new income from new capacity from United Seamless Tubulaar Private Ltd in India; and (iii) WSP Holdings has shown some improvement and has been pursuing new markets in South America.
Perodua has revised its FY11 sales forecast lower to 190,000 from 195,000 units. It expects its sales to improve in 2HFY11 as production volume will normalise along with the newly launched Perodua Myvi in June 2011.
We reiterate our 'neutral' recommendation and maintain our target price at RM7 using sum-of-parts valuation with FY11 price-earnings ratio of 10 times for the auto division, 15 times PER for O&G, nine times PER for equipment and eight times PER for mechanical and electrical. ' MIDF Research, Aug 22
This article appeared in The Edge Financial Daily, August 23, 2011.
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