Analyst Research Report Snapshot


Results Note – UMW (REDUCE, maintain) - Within expectations, intense competition to persist




Affin Hwang Investment Bank Bhd


26 Feb 2014





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The launch of Vios helped lift core net profit sequentially to RM222m 4QFY13 core net profit rose 15.7% qoq to RM222.3m (-13.7% yoy) thanks to the launch of Toyota Vios in October 2013. This brings FY13 core net profit to RM880.6m (-11.7%). The results are inline with Affin’s estimates but 6% below street. The Group declared a third interim net DPS of 9 sen, bringing net DPS declared YTD to 44 sen/share (net yield of 3.7%). Stepping into FY14, the Group expects to sell 98,400 and 197,000 units of Toyota and Perodua, respectively. We project 2014 Toyota and Perodua sales of 95,247 and 200,000 units, respectively. Taken together with the more robust UMW O&G earnings growth over the next two years, we project a 3-year (FY13-16) earnings CAGR of 8%. Valuation is lofty (FY14 PER of 14.4x) as the listing of UMW O&G (in November 2013) served to clearly demarcate the Group’s high growth segment. Maintain REDUCE with an unchanged RNAV-based TP of RM11.35/share. Key upside risks: (1) a more active capital management; (2) better-than-expected Toyota sales outlook into 2014-15; and (3) sharp turnaround within the equipment and overseas manufacturing segments.

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