Hot Stock NCB shares fall on weak 3Q results

by **Cals** Tue 29 Oct 2013, 12:33

Hot Stock NCB shares fall on weak 3Q results

Business & Markets 2013

Written by Cynthia Blemin of theedgemalaysia.com

Tuesday, 29 October 2013 11:33

KUALA LUMPUR (Oct 29): Shares of NCB Holdings Bhd fell as much as 3% in morning trades, after the transport and logistics provider reported a 40% fall for its third quarter (3Q) net profit yesterday.
NCB recorded a much lower net profit of RM27.3 million for its third financial quarter to end-September, 2013, as compared to RM45.17 million a year ago.
At 11.00 am, shares of NCB fell 6 sen or 1.62% to RM3.64, on trades of 274,000 shares.
Earlier, the share fell as low as RM3.60 to become one of the bourse’s top losers.
In a note today, MIDF Research said: “We trim down our FY13-14 earnings forecasts by 10.4% and 14.4% respectively, incorporating the factor of weaker than expected container throughput growth and continued losses in the haulage segment.”
But the research house upgraded its recommendation to buy from neutral as the share price has retraced significantly to warrant an upgrade, with an unchanged target price (TP) of RM4.50.
NCB is now trading at attractive forward PER of 14.5x as compared to its average peers’ PER of 22.0x while offering a decent dividend yield at 4.6%, it noted.
MIDF Research said NCB recorded a net gain of RM27.3 million in 3Q13 as compared to previous quarter net loss of RM5.7 million.
The group’s 2Q13 performance was significantly dragged down by impairment losses in its haulage segment with a loss of RM42.9 million, it pointed out.
“Year-on-year, 3Q12 net profit decreased 39.6%, mainly due to the negative growth in container throughput which was handled by Northport and higher operating losses in its haulage segment,” it said.
The research house expects container throughput to recover upon completion of container terminal 4 (CT4) in the coming fourth quarter.
MIDF Research said the completion of CT4 will increase the current annual handling capacity from 4.5 million TEUs to 5.5 million TEUs.
The new terminal will be specifically utilized to cater the demand of larger container vessels due to its advantages of 17m water depth (vs 15m in other berths) and heightened ship-to-ship (STS) cranes, it added.
Therefore, it believes that Northport’s container throughput will pick up in the subsequent quarters, it noted.