By BIMB Securities Research
Target price: RM17.80
BATU Kawan Bhd’s first-quarter ended Dec 31, 2014 net profit of RM117mil was in line with BIMB Securities Research’s estimates, which made up for 20% of its full-year forecast.
It said first-quarter earnings declined 25% year-on-year, which Batu Kawan attributed to its lower plantation profit caused by weaker crude palm oil (CPO) and rubber prices averaging at RM2,138 per tonne and RM6.6 per kg, as well as reduced crops for both CPO and rubber.
It said its manufacturing division also dipped by 55% year-on-year as the weak oil price affected the fatty alcohol and surfactant businesses.
“However, on a quarter-on-quarter basis, net profit improved by 29%, on the back of contributions from its manufacturing division. Margins from the manufacturing division were seen to increase from 0.8% to 3.1% quarter-on-quarter,” it added
BIMB said it maintained its financial year ending Sept 30, 2015 and 2016 net earnings forecast and target price at RM17.80 based on an unchanged price-earnings ratio of 12 times over 2015 earnings per share estimates.
Target price: RM7.36
BINTULU Port posted a fourth-quarter core net profit of RM37.9mil bringing the total to RM143mil for 2014, which AmResearch said would have met its expectations if not for a higher tax rate of 25.7% vis-à-vis its assumption of 18%.
It said pre-tax profit came in at RM192.7mill against its forecast of RM192.9mil, while operating profits were very much in line with its and consensus expectations.
AmResearch said Bintulu Port’s better operating performance was due to higher revenue from the handling of container, project cargo, palm oil bulking and alumina.
The group proposed a single-tier final dividend of 6 sen per share and a special dividend of 3 sen per share, amounting to a total of 27 sen per share for the full year, which AmResearch said was slightly higher than its 26 sen per share forecast.
“This translates into a dividend payout of 86.7%. The dividends are expected to be paid on May 26, 2015, with an ex-date of 13 May 2015. The total payout translates into a yield of 3.7%,” it said.
Liquefied natural gas (LNG) cargo, the research house said, accounted for 65.5% of total group revenue in 2014 compared with 68.9% in the previous year while the bulking segment’s contribution rose to 7.6% of total operating revenue from 6.9% in 2013.
In line with its expectations, AmResearch said non-LNG cargo and bulking services’ revenue grew strongly by 16.3% and 13.4%, respectively, while LNG revenue growth was flat at -0.9%.
The research house quoted Bintulu Port as saying that said the handling of LNG vessel calls and cargoes would still be its most important revenue contributor and that bulking operation was also expected to contribute positively.
“The number of vessels called for LNG in the fourth quarter of 2014 was 125 versus 129 a year earlier. For the full year, it totalled 471 versus 489 calls in 2013,” it added.
AmResearch said it was maintaining its forecasts, pending a more in-depth review of its numbers. However, it believed Bintulu Port’s medium-term growth prospects had been priced in.
By Kenanga Research
Target price: RM4.36
PESTECH International Bhd’s 12-month net profit ending Dec 31, 2014 of RM24.3mil, came in within Kenanga Research’s expectations.
Fourth-quarter net profit rose 3% quarter-on-quarter to RM7.4mil from RM7.2mil although revenue dipped 3%.
Kenanga Research said this was mainly attributable to a broad-base margin improvement, with operating margin at project segment improving 2% to 20%. As such, it added that earnings before interest and tax improved 5% to RM12.7mil despite topline declining 7% over the quarter.
“The product segment posted higher operating profit of RM1mil from RM100,000 after a higher revenue of RM4.1mil from RM1.2mil, thanks largely to higher original equipment manufacturer products manufactured for Siemen,” it added.
Year-on-year, it said fourth-quarter net earnings grew 4% from RM7.1mil as revenue rose 7% from RM62.3mil previously.
Kenanga Research said the current order book of RM500mil, from RM530mil three months ago, should provide closer to two years of firm earnings visibility.
“In addition, Pestech is tendering for RM1.6bil work of jobs of which it has a fair chance of securing some,” it added.
Kenanga Research said it was making no changes to the company’s 2015 and 2016 numbers and that it was keeping its price target of RM4.36 per share unchanged based on the company’s 2015 price to earnings ratio of 13 times.
Although the total upside potential is only 3%, the research house said it was still keeping its “outperform” call unchanged on expectations of major contract flows in the next few months.