TCM (BUY) - Indochina the Next Growth Phase

TCM (BUY)

Indochina the Next Growth Phase

• In line – Reported 4Q11 core net profit of RM30.7m, leading to FY11 core profit of RM221.7m, in line with our forecast of RM226m, but below consensus’s RM250.7m.
• FY11 sales performance was affected by the global supply chain disruption due to Japan tsunami (Mar 2011) and Thailand flood (Oct 2011), as well as the weakening of RM against US$.
• Management expects supply chain to return to normal by end 1Q12, and anticipate stronger 2H2012.
• Vietnam operation reported EBITDA loss of RM5.8m due to high operational start-up cost. We expect the foreign unit to gain momentum in FY12 with the commencement of Danang manufacturing plant.
• Announced final gross dividend of 6 sen less 25% tax (net dividend 4.5 sen). The total net dividend for FY11 will be 9 sen (2.1% net dividend yield).
• Maintain BUY with unchanged Target Price of RM5.10.

Source: HLIB Research 27 Feb 2012