GMG Global

GMG Global: 2Q13 earnings deteriorated 90% y/y to $1.2m as revenue slipped 4.9% to $260.5m. This brought 1H13 earnings to $14.1m (-39% y/y) and revenue to $494.1m (-11.2%), mainly caused by a 20.8% decrease in rubber prices to $3,621 per ton over the period due to the weak economic data from U.S. and China. This was partially mitigated by a 12% increase in sales tonnage to 136,449 tons in 1H13 as a result of higher contribution from its Ivory Coast subsidiary, ITCA, and Belgium-based 35%-owned associate, SIAT SA. Management expects prices to remain range-bound at the current price of US$2,100 for 2H13, but remain optimistic on the longer-term demand for rubber with the global on-going industrialization and urbanization. Gearing lowered slightly to 0.14x (from 0.15x at FY12). GMG trades at 30x trailing P/E and 0.96x P/B.