Friday, August 10, 2012

Petrafoods

Petrafoods: 2Q12 fell slightly below consensus, with 1H12 at just 47% of FY12 consensus. 2Q12 revenue slipped 13% yoy to US$378m as weakness in Cocoa Ingredients (US$254m, -22%) offset strong Branded Consumer sales (US$124m, +15%). Cocoa Ingredients’ margins and volumes were lower as higher industry grinding capacity intensified competition. Stronger margins from Branded Consumer stepped in to lift the group’s net profit by 7% yoy to US$16m. CIMB believe Cocoa Ingredients will have to contend with more grinding capacity from now till 2013. House highlight two worrying trends. First, vol have fallen to a 2-year low as Petra turns down low-margin orders. Second, grinding margins have slipped to a low of US$209/Mt (from US$275 in 2Q11 and US$241 in 1Q12) as overcapacity created pricing pressure. Overall, house maintains Underperform with TP $2.04, with no changes to EPS or target price (15x CY13 P/E, 7-year mean). Anticipate de-rating catalysts from further margin pressure as the industry’s supply glut worsens.

No comments:

Post a Comment