GMG Global

GMG Global: Announced 2Q11 results, generally in-line, however boosted partly by a one-off gain.
Rev at $288.4m, +257.3% yoy and +2% qoq while net profit at $17.9m, +89.6% yoy and +16.1% qoq. Gross margins dropped to 11.1% vs 21.5% yoy, but improved vs 10.1% qoq, large drop due to Grp’s substantial increase in tonnage from processing facilities, derived from Teck Bee Hang.

Top-line driven by an increase in sales vol at 47,409 ton sold, +149% yoy and +4.3% qoq, while ASP at $6,084/ton, +43.7% yoy and -2.2% qoq. Net profit of grp also boosted by a one-off gain of $12.4m from waiver of loan owed by Teck Bee Hang and compensation of social cost from the Cameroon for operations in Hevecam. Excluding this, core operating profit would have been $22.3m, +74.3% yoy and -22.1% qoq.

Group continues to maintain a healthy balance sheet with net gearing of abt 10%, giving headroom for further debt undertaking. Going forward, tip Natural rubber prices to be volatile in 2Q11. Barring unexpected adverse global devt, Grp expects natural rubber in coming qtrs to remain resilient. At current price, valuations appear compelling, trading at 12.8x FY11E P/E vs historical average of 30x.