China Fishery: 1Q12 results in-line with expectations. Rev at US$125.8m, +9.3% yoy, while net profit at US$23.8m, +20.8% yoy. Results accounted for 19% and 17% of estimates for FY12 rev and net profit respectively.
1Q is traditionally the weakest qtr as fishing is not in season. Sales benefited from the delayed utilization of its fishing quota from 4QFY11 in anticipation of higher ASPs, as well as higher sales volume from carried over inventory due to the non-fishing season.
Benefiting from cost savings, Gross margins declined from 37.1% to 30.5%, with the higher cost of sales attributable to the purchase of fish for on-board processing in the North Atlantic by its factory vessel, as opposed to pure trawling operations.
Net margin improved from 17.1% to 18.9%, with lower finance costs (-37.3% yoy) and lower administrative costs (-37.1% yoy), attributable to lower bank charges and admin fees, and interest cost savings from the early redemption and refinancing of its senior notes in Nov 11.
Ratings as follow:
UOB kay Hian Maintains Buy with $1.82 TP.
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