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Results Note – UMW (REDUCE, maintain) - Below expectations




Affin Hwang Investment Bank Bhd


01 Sep 2013





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1HFY13 core net profit accounts for 44% of full year estimates Lack of new model launches and intense competition drove down 2QFY13 core net profit to RM220.4m (-19.8% yoy; -4.1% qoq). This brings 1HFY13 core net profit to RM466.3m (-1.7%). Accounting for 44% and 43% of Affin and street estimates, the results came in below expectations. The discrepancy on our end stemmed from lower-than-expected Toyota unit sales. In the absence of new model launches for the rest of this year together with continued intense competition and stronger US$ in 2HFY13, we trim FY13-15 EPS forecast by 8-9%. In tandem with the earnings downgrade, our SOP-derived TP is also lowered to RM12.44/share. Maintain REDUCE. The new VIOS model to be launched in October will help revive FY14’s earnings growth but for now, we believe FY13 growth will be a relatively flat. We also believe that the listing of its O&G unit (by 4QFY13) has been priced-in. Toyota’s potential margin compression as a result of intense market competition will dampen valuation expansion in the near-term.

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