Its 9M19 net profit of RM36.2m came in above Streets expectations as this was because of an overestimation of the negative impact from its suspension of shipments of carbon steel butt-weld fittings to the U.S. following a preliminary affirmative anti-circumvention determination issued by the U.S. Department of Commerce (DOC) in July-2018.
The company had also announced treasury share dividend on the basis of 1 share for every 100 existing shares.
Cumulative 9M19 net profit saw a flattish improvement of 1% YoY, on the back of better trading segment (+18%) due to increased demand, mitigating deteriorated manufacturing segment (-18%) due to the aforementioned U.S. shipment suspensions.
For the individual quarter of 3Q19, net profit of RM11.2m came in higher by 11% YoY, thanks to jump in trading segment (+47%) coupled with improvement in trading margins by +3ppts, offsetting 47% plunge in its manufacturing segment due to the aforementioned U.S. shipment suspensions.
Sequentially, 3Q19 net profit recorded a mild 3% increase QoQ largely thanks to the favourable effective tax rate (20% vs. 27%).
Earlier, it was anticipated a final decision from the DOC regarding Pantech’s anti-circumvention determination to be reached by Feb-2019. However, with the U.S. government now (Till end Jan 2019) in shutdown, this may have thrown the timeline into uncertainty. With no clarity as to when will this overhang will pass, Streets opted to trim their FY20E earnings for full-year loss of butt-weld fittings to the United States.
At TP of RM0.46 is based on the uncertainty of the DOC issue with a floor valuations of 0.6x PBV (at around -2SD from its mean PBV valuations).
The company is also lack of re-rating catalyst, especially the uncertainty regarding the shipment-to- US issue, versus previous expectations of a conclusion by Feb- 2019.
No comments:
Post a Comment