GMG

GMG: Announced 4Q11 results, which was above expectations on a YOY basis. 4Q11 Rev at $310.8m, +114.6% yoy and -0.5% qoq, while net profit at $16.7m, +29.4% yoy and -31.8% qoq. Result brings FY11 rev to $1.2b, +185.3% yoy and net profit to $74.6m, +65.6% yoy.

4Q11 saw a continued increase to tonnage sold, at 58,678tons, +91.6% yoy and +5.9% qoq, while ASP for 4Q11 at $5,296/ton, +12% yoy and -6% qoq. Overall strong FY11 results was largely due to the increase in tonnage and ASP from $4,292/ton in FY10 to $5,771/ ton in FY11 (+34.5% yoy), while Grp’s Tonnage sold increased to 206,948 tons +112.1% yoy.

Strong sales vol was largely attributed to Teck Bee Hang, Grp’s 55% owned subsidiary in Thailand with a current 200,000mtpa capacity, which contributed about 50% of GMG’s tonnage output for FY11. As expected, Gross profit margin ended at 14.3% for FY11 vs 25.0% in FY10 due to larger processing tonnage contributions from TBH, as grp diversifies downstream.

Operating expenses for the yr registered a total increment of 106% to $81.3m for FY2011 from $39.4m in FY10, largely due to the first time inclusion of Teck Bee Hang’s expenditure. The increase in operating expenses is in line with the overall increase in rev.

Going forward, grp note that rubber prices has been averaging about US$3,750/ton this yr. Barring unexpected adverse global development, grp expects prices to remain at current levels for 1H12. Grp will remain focused on its fundamentals and core strengths while actively seeking both upstream and midstream opportunities.
We note that grp’s fundamentals remain strong with grp in a strong net cash position of $342.5m, or 4.5c/share. At current price, grp trades at 11.3x P/E, and 7.9x Ex cash P/E.