Mewah International

Mewah International: 4Q13 results came in ahead of bearish estimates, as net profit inched up 2.9% to US$9.3m taking FY13 net profit to US$20.9m (-15.6%). Revenue rose 8.2% to US$830.9m led by a 17.0% rise in sales volume to 971,000 MT, despite a 7.5% drop in average selling prices (ASPs) versus the corresponding period. Gross margins improved to at 7.9% from 6.7%, as operating margins per MT rose 9.2% to US$31.0, aided by the increase in sales and gains from derivative financial instruments. Bottom-line was however partly weighed by a 208% rise in other losses to US$8.5m, attributable largely to FX losses. Going forward, Mewah notes that the last two years of depressed sentiments for the palm oil industry have resulted in industry consolidation. With improved market conditions and outlook towards the end of 2013 the group has managed to participate in larger trade flows, while its competitive position in the industry have enabled it to appropriate better margins. Mewah’s current net-gearing stands at 0.36 and at current price, the group trades at 15.3x annualized 4Q13 P/E, versus closest peer Wilmar of 11.9x forward P/E. The group has declared a final dividend of $0.0073 per share, taking FY13 total payout to $0.0085 (same as FY12). Segmental breakdown as follows: Bulk segment: Revenue advanced 14.1% to US$590.2m and operating margins surged 89.5% to US$19.9m, as sales volume grew 19.3% to 716,000 MT despite a 4.3% drop in ASPs. This was supported by higher sales within Asia particularly to India, China and Bangladesh. Consumer pack segment: Revenue dipped 4% to US$240.7m and operating margins slumped 22.1% to US$10.2m, on an 11% rise in sales volume to 255,000 MT and a 13.4% drop in ASPs.