KUALA LUMPUR: Dutch Lady Milk Industries Bhd
's 1QFY19 core net profit of RM34.3mil was 8% lower year-on-year (y-o-y), missing expectations, said Kenanga research.
"1Q19 core net profit of RM34.3m is below our, and consensus, expectations, making up 22% of both full-year estimates.
"We had anticipated a c.30% contribution to FY19E earnings due to seasonal weakness during the mid-year," it said.
The research house said the poor topline delivery and slower-than-expected margin recovery contributed to the earnings miss.
The interim dividend of 50 sen per share came within expectations, said Kenanga, which anticipates a 220 sen payout for FY19E.
FOr the quarter, sales slipped 0.4% to RM265mil as a result of downward average selling price adjustments to stimulate volume growth.
Gross profit margin improved 0.1ppt to 40.8% as prices for milk poweder saw better averages.
"Post-results, we leave our FY19E/FY20E numbers unchanged for now, as we await updates from an upcoming meeting with management.
"However, there could be possible downside bias adjustments to our top-line assumptions. Note that if we cut earnings by 5% to reflect the weakness in sales growth, our call has downside
risks," said Kenanga.
It maintained its outperform rating and target price of RM68.30.
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