Saturday, September 28, 2013

NTPM - Still Going Strong

Price Target:0.69
Last Price:0.63
Still Going Strong

NTPM’s 1QFY14 results were in line. Sales and earnings grew 8.6% and 17.6% y-o-y respectively, bolstered by better performance across the board, especially in the personal care segment. We still like the stock given its recent Vietnam plant expansion and stellar growth in the personal care business. Maintain BUY, with our FV unchanged at MYR0.69, based on 13x CY14 EPS.

¨ Still looking good. NTPM’s1QFY14turnover rose 8.6% y-o-y to MYR124.8m while net profit jumped 17.6% y-o-y to MYR12m. The stronger sales were mainly driven by better showing at its paper and personal care product divisions.
Revenue from the tissue paper segment grew 5.3% y-o-y due to higher demand for tissue products in the domestic market, while the higher sales of personal care products (+17.7% y-o-y) were boosted by stronger demand for baby diapers. Similarly, the earnings improvement was bolstered by higher PBT from its paper products (+5% y-o-y) and personal care products (+62.5% y-o-y) segments on the back of more robust toplines. Vis-à-vis 4QFY13, revenue rose 4.3% while net profit fell 6.3% q-o-q. The drop in profit was mainly caused by an unrealised loss on mark-to-market derivatives of around MYR1.3m due to the weakening of MYR against other currencies, namely USD and SGD, compared with an unrealised gain of MYR0.7m in the preceding quarter.

¨Margin. Both EBIT and PBT margins expanded 0.7ppt y-o-y, largely supported by a stronger PBT margin in the personal care products segment – which was higher at 10.8% y-o-y from 7.8%. This offset a slight decline in PBT margin for paper products (14.3% vs 14.35% y-o-y).

¨Key risks. The key risks include volatile raw materials prices and weaker demand amid a softening economy. As the results are within our expectations, we are leaving our forecasts unchanged.

Maintain BUY. We are positive on the group’s recent expansion into Vietnam as well as decent growth at its baby diapers unit. Maintain BUY, with our FV unchanged at MYR0.69, based on 13x CY14 EPS.

Source: RHB

Publish date: 24/09/13

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