KUALA LUMPUR: Maybank Investment Bank Research has reduced its FY19/20/21 earnings forecasts by 19%/15%/14% for Atlan Holdings
and also lowered the target price by 40 sen to RM6.20.
In its report issued on Friday, it said the lower earnings outlook was mainly adjusting for lower occupancy rates at the two properties and softer revenue from the duty-free segment to account for the short-term supply of key alcoholic products.
“While the visibility of the supply constraint is limited currently, management believes the issue is only short term. Consequently, we also lower our sum-of-parts target price by 40 sen to RM6.20,” it said.
Maybank Research said the 1QFY2/19 results were below its expectations mainly due to supply shortages of key alcoholic products. Meanwhile, the first net dividend per share of 10 sen was declared.
Excluding a net exceptional loss of RM800,000 (i.e. forex, changes in fair value, donations), 1QFY19 core net profit was RM8.2mil (-28% on-year, -50% on-quarter ) – at only 18% of its FY19 net profit forecast.
The 1QFY19’s core earnings were largely dragged lower by the (i) duty free segment – global supply shortages of key alcoholic products (namely cognac) and (ii) property and hospitality segment – lower occupancy rates of properties and higher opex.
However, these were partly mitigated by (iii) the automotive segment’s stronger revenue due to higher orders received from customers.
Similarly, on-quarter earnings were also mainly impacted by the duty free segment’s supply shortages issue.
“We maintain our long-term positive outlook on Atlan based on its resilient earnings from its duty free business and undervalued assets at Jalan Ampang and Bukit Kayu Hitam.
“Meanwhile, net cash remains healthy at RM276mil or RM1.09 a share (end-1QFY19) which would support more M&A activities,” it said.
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