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TCM - 4Q11 Results

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TCM - 4Q11 Results Empty TCM - 4Q11 Results

Post by mabs Mon 27 Feb 2012, 09:32

Result


  • Below expectation
    – TCM recorded net profit of RM30.76m in 4Q11, down 43.6% qoq and 40.9%
    yoy. Full year earnings of RM214.52m (-6.2% yoy) was below our
    expectation (90.8%) and the consensus estimates (71.5%), despite a
    healthy revenue growth of RM38540.5m (+9.72 yoy) in 2011.

Comment


  • Deteriorating margin
    – Poor performance in the final quarter, which saw the net margin in
    4Q11 stood at 3.52% (against 6.2% 4Q10) was the reason behind the
    disappointing net income. This probably signals TCM is still struggling
    with the supply disruption caused by natural disasters last year.
    Furthermore, the unfavourable exchange rates and higher raw material
    prices also impacted its operating margin.


  • New models in 2012
    - TCM will introduce a B-segment sedan, a few CBU models and the
    electric-powered Nissan LEAF this year following the launching of the
    Navara Single Cab and NV200 Vanette last weekend. The widening of
    product range will further consolidate Nissan position as one of the top
    5 car-makers in the country.


  • Positive volume growth
    – We expect TCM to hit 35,000 vehicles sales this year with its new
    exciting models. We believe TCM is able to achieve its target sales of
    exceeding the industry volume growth of +2.5% yoy with its new models in
    the pipeline.


  • Fairly muted impact of the loan tightening.
    We don’t see the stricter loan approvals to affect Nissan car sales as
    those had their car loan rejected were mostly low-income group targeting
    compact cars.


  • The Group declared a final gross dividend of 12 sen/share (equivalent to dividend yield of 2.8%) which is same as last year.


Earnings Outlook/Revision


  • With Nissan venturing into new market segments and diversifying model range, we fine-tuned our earnings forecast
    as we expect TCM to post higher turnover of RM4270m (+11%) in 2012F and
    RM4750m (+11.2%) in 2013F, with sales volume of 35,000 and 37,800 units
    respectively.


Valuation & Recommendation


  • Maintain HOLD with a higher TP of RM4.50. We roll over our valuation to year 2012, which is pegged at 10X PER (in line with its mean and industry average).
mabs
mabs
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