Armstrong Industrial amazonaws com
Technology | 14 November 2011
HOLD
Armstrong Industrial
3Q11 Results
Perfect storm
Analyst
Event Armstrong’s 3Q11 results were hard hit by a weak US$, mark‐to‐ market losses on forward forex contracts and higher material costs. We expect the next two quarters to remain weak due to the perfect storm of earthquake and flooding; 4Q11 in particular could be marked by asset impairment losses due to the Thai flooding. However, operating cash flow stayed strong and Armstrong could still declare a dividend, albeit much reduced from last year’s $0.04/share. With the stock trading at around BVPS of $0.195 and almost 5% dividend yield, we maintain our HOLD rating on Armstrong. Our View Year‐on‐year weakness in the US$ has shaved 5ppt off Armstrong’s topline, causing revenue to fall by 3% YoY and gross profit by 19% YoY. The unexpected surge in US$ from S$1.20 to S$1.30 at the end of 3Q11 also resulted in unrealised mark‐to‐market losses of $5.7m. Thus, 3Q11 net profit slid by 90% YoY to $0.5m from $5m a year ago. Operations‐wise, the various businesses showed sequential recovery. Despite the weak US$, data storage managed 4% YoY growth. Consumer electronics fell by 20% YoY on the lingering effects of the March 2011 Japanese earthquake, but nevertheless there was a 5% QoQ improvement. Automotive stood out for its quick recovery from the earthquake, driven by customers in China and Thailand. We expect a weak 4Q11 and 1H12. In particular, the Thai floods are expected to have a direct impact on Armstrong’s data storage business, as well as on its two major customers, Seagate and Western Digital. There is likely to be asset impairment charges in 4Q11 as well. However, cash flow remained strong and we expect a final dividend of $0.01/share, albeit much reduced from last year. Action & Recommendation We cut our earnings forecasts by 47% for FY11 and 27% for FY12, and switch to book value valuation. Assuming 0.9x FY12F BVPS of $0.217, our target price is reduced to $0.19. Maintain HOLD.
Gregory YAP [email protected] (65) 6432 1450
Price Target ST Index
$0.22 $0.19 2,790.94
Historical Chart Vol ('000)
Price ($)
Performance
17‐Oct‐11
14‐Nov‐11
19‐Sep‐11
25‐Jul‐11
22‐Aug‐11
0
27‐Jun‐11
2,000
0.15
30‐May‐11
4,000
0.20
04‐Apr‐11
6,000
0.25
07‐Mar‐11
8,000
0.30
02‐May‐11
10,000
0.35
10‐Jan‐11
12,000
0.40
07‐Feb‐11
14,000
0.45
13‐Dec‐10
0.50
15‐Nov‐10
Absolute (%)
1m ‐8.3
3m ‐15.4
6m ‐42.9
Relative (%)
‐9.9
‐13.6
‐35.2
Stock Information
Ticker code ARMS.SI ARMS SP Market cap (US$m) 88.4 52‐week high (S$) 0.445 52‐week low (S$) 0.215 Shares issued (m) 514.5 6m avg d.vol (US$m) 0.2 Free float (%) 54.3 Major shareholders (%) Ong Family (45.7)
Year End Dec 31 Sales (S$ m) Pre‐tax (S$ m) Net profit (S$ m) EPS (S cts) EPS growth (%) PER (x) EV/EBITDA (x) Yield (%)
Key Indicators
ROE (%) Net cash (S$m) NTA (S$) Interest cover (x)
0.5 5.0 0.19 9.7
2009 173.7 18.8 14.1 2.8 7.1 7.8 5.6 7.3
2010 225.4 33.3 24.9 5.0 76.5 4.4 3.6 18.2
2011F 216.0 11.8 7.6 1.5 ‐69.5 14.5 7.7 4.5
2012F 233.4 19.2 13.3 2.6 74.9 8.3 5.5 4.5
2013F 253.8 22.1 15.3 3.1 15.6 7.2 4.9 4.5
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Co. Reg No: 198700034E MICA (P) : 090/11/2009
Armstrong Industrials
14 November 2011
Figure 1: Latest quarterly results 3 mths ended (S$m)
Sep‐11
Sep‐10
% YoY
Jun‐11
% QoQ
Revenue
56.0
58.0
‐3.4%
52.7
6.3%
Gross profit
12.3
15.1
‐18.7%
11.7
5.1%
Pretax profit
1.7
6.7
‐74.8%
3.5
‐52.0%
Net profit
0.1
4.6
‐97.3%
2.1
‐94.2%
‐3.4
0.2
na
‐0.2
na
Underlying net profit
3.5
4.4
‐19.3%
2.3
55.9%
Underlying EPS (S cts)
0.7
0.9
‐19.2%
0.4
56.6%
DPS (S cts)
0.0
0.0
na
2.0
na
Gross margin (%)
22.0%
26.1%
‐4.1%
22.2%
‐0.2%
Pretax margin (%)
3.0%
11.5%
‐8.5%
6.7%
‐3.6%
Net margin (%)
0.2%
7.8%
‐7.6%
4.0%
‐3.8%
Exceptionals
Source: Company
Figure 2: Sequential improvement in 3Q11 in consumer electronics, office automation and automotive
20.0
Revenue (S$m)
15.0
10.0
5.0
‐ 1Q10
Data Storage
2Q10
3Q10
Consumer Electronics
4Q10
Office Automation
1Q11
2Q11
Automotive
3Q11
Others
Source: Company
2
Armstrong Industrials
14 November 2011
Balance Sheet
Profit and loss
YE Dec (S$'m) 2009 2010 Total assets 149.5 164.6 Current assets 108.1 123.1 Cash & ST investment 30.3 26.2 Trade debtors 47.7 55.4 Other debtors 29.7 40.6 Others 0.3 0.9 Other assets 41.4 41.5 LT investments 0.0 0.0 Net fixed assets 40.1 40.2 Other investments 1.3 1.3 Total liabilities 55.7 63.8 Current liabilities 46.4 54.0 Trade creditors 32.4 35.6 ST borrowings 8.0 12.6 Others 6.0 5.8 Long‐term liabilities 9.3 9.8 LT borrowings 2.9 1.8 Others 6.3 8.1 Shareholder's equity 93.8 100.8 Paid‐in capital 48.9 49.6 Reserve 50.6 57.5 Capital adjustment ‐5.7 ‐6.3 Source: Company data, Kim Eng estimates
2011F 175.4 125.7 27.4 53.2 45.1 0.0 49.6 0.0 48.2 1.5 72.1 61.3 35.5 20.0 5.8 10.8 2.0 8.8 103.2 49.6 59.9 ‐6.3
2012F 187.2 129.6 23.8 57.6 48.2 0.0 57.6 0.0 56.2 1.5 75.8 64.2 38.4 20.0 5.8 11.7 2.0 9.7 111.4 49.6 68.1 ‐6.3
2013F 201.7 136.0 21.7 62.6 51.7 0.0 65.6 0.0 64.2 1.5 80.1 67.5 41.7 20.0 5.8 12.6 2.0 10.6 121.6 49.6 78.3 ‐6.3
Key ratios YE Dec Growth (% YoY) Sales OP EBITDA NP
2009 ‐4.8 3.2 5.5 7.1 7.1
2010 2011F 2012F 2013F 29.8 76.2 59.2 77.1 76.5
EPS Profitability (%) Gross margin 25.4 27.5 Operating margin 11.0 14.9 EBITDA margin 14.1 17.3 Net profit margin 8.1 11.0 ROA 9.4 15.1 ROE 15.0 24.7 Stability Gross debt(cash)/equity (%) 11.7 14.2 Net debt(cash)/equity (%) ‐20.6 ‐11.8 Int. coverage (X) 85.1 97.6 Int. & ST debt coverage (X) 3.4 6.0 Cash flow int. coverage (X) 36.2 46.4 Cash flow int. & ST debt (X) 1.5 2.8 Current ratio (X) 2.3 2.3 Quick ratio (X) 1.3 1.3 Net debt/(cash) (S$'m) ‐19.4 ‐11.9 Per share data (cents) EPS 2.8 5.0 CFPS 4.7 7.7 BVPS 18.2 20.1 SPS 33.7 45.0 EBITDA/share 4.8 7.8 DPS 1.6 4.0 Source: Company data, Kim Eng estimates
3
‐4.2 ‐63.6 ‐53.2 ‐69.5 ‐69.5
8.1 61.0 46.4 74.9 74.9
8.7 14.7 14.6 15.6 15.6
22.5 5.7 8.4 3.5 4.3 7.4
23.0 8.4 11.4 5.7 7.1 11.9
23.5 8.9 12.1 6.0 7.6 12.6
21.3 ‐5.2 53.4 3.6 35.2 2.4 2.1 1.2 ‐5.4
19.8 ‐1.7 51.2 3.8 41.3 3.1 2.0 1.1 ‐1.8
18.1 0.2 53.1 4.3 42.8 3.5 2.0 1.1 0.3
1.5 3.5 20.1 42.0 3.5 1.0
2.6 5.1 21.7 45.4 5.2 1.0
3.1 5.9 23.6 49.3 5.9 1.0
YE Dec (S$'m) 2009 2010 2011F 2012F 2013F Sales 173.7 225.4 216.0 233.4 253.8 Cost of goods sold ‐129.5 ‐163.4 ‐167.4 ‐179.7 ‐194.2 Gross profit 44.2 62.0 48.6 53.7 59.6 Other Income 1.6 1.0 2.5 1.0 1.0 Operating expenses ‐24.9 ‐28.4 ‐30.2 ‐32.7 ‐35.5 Operating profit 20.9 34.6 20.9 22.0 25.1 Net interest income ‐0.2 ‐0.4 ‐0.4 ‐0.4 ‐0.5 Share of associates 0.0 0.0 0.0 0.0 0.0 Pretax income 18.8 33.3 11.8 19.2 22.1 Income taxes ‐4.1 ‐6.8 ‐2.5 ‐4.0 ‐4.6 Minority interest ‐0.7 ‐1.6 ‐1.8 ‐1.9 ‐2.1 Net income 14.1 24.9 7.6 13.3 15.3 Exceptionals 0.0 0.0 0.0 0.0 0.0 Net income bef exceptionals 14.1 24.9 7.6 13.3 15.3 EPS (cents) 2.8 5.0 1.5 2.6 3.1 EBITDA 24.5 39.0 18.2 26.7 30.6 Source: Company data, Kim Eng estimates
Cashflow YE Dec (S$'m) 2009 2010 2011F 2012F 2013F Operating cash flow 8.9 16.5 13.7 17.7 20.2 Pretax profit 18.8 33.3 11.8 19.2 22.1 Depreciation & amortisation 5.4 5.4 6.0 7.0 8.0 Change in working capital ‐9.3 ‐14.9 ‐1.6 ‐4.5 ‐5.2 Others ‐6.1 ‐7.2 ‐2.5 ‐4.0 ‐4.6 Investment cash flow ‐3.7 ‐4.2 ‐5.1 ‐4.0 ‐3.0 Net capex ‐4.3 ‐6.6 ‐8.0 ‐8.0 ‐8.0 Change in LT investment 2.0 2.0 3.0 4.0 5.0 Change in other assets ‐1.5 0.5 ‐0.1 0.0 0.0 Cash flow after invt. 5.1 12.3 8.6 13.7 17.2 Financing cash flow ‐1.5 ‐13.9 ‐2.7 ‐13.3 ‐14.4 Change in share capital 0.0 0.6 0.0 0.0 0.0 Net change in debt 3.6 3.4 ‐7.7 0.0 0.0 Change in other LT liab. ‐5.1 ‐17.9 5.0 ‐13.3 ‐14.4 Net cash flow 3.7 ‐1.6 5.9 0.5 2.9 Source: Company data, Kim Eng estimates
ANALYSTS’ COVERAGE / RESEARCH OFFICES SINGAPORE
INDONESIA
PHILIPPINES
Stephanie WONG Head of Research Regional Head of Institutional Research +65 6432 1451 [email protected] Strategy Small & Mid Caps Gregory YAP +65 6432 1450 [email protected] Conglomerates Technology & Manufacturing Transport & Telcos Rohan SUPPIAH +65 6432 1455 [email protected] Airlines Marine & Offshore Wilson LIEW +65 6432 1454 [email protected] Hotel & Resort Property & Construction Anni KUM +65 6432 1470 [email protected] Conglomerates REITs James KOH +65 6432 1431 [email protected] Finance & Banking Logistics Resources Eric ONG +65 6432 1857 [email protected] Marine & Offshore Energy OOI Yi Tung +65 6433 5712 [email protected] Property & Construction YEAK Chee Keong, CFA +65 6433 5730 [email protected] Retail & Consumer Engineering Infrastructure
Katarina SETIAWAN Head of Research +6221 2557 1125 [email protected] Consumer Infra Shipping Strategy Telcos Others Ricardo SILAEN +6221 2557 1126 [email protected] Auto Energy Heavy Equipment Property Resources Rahmi MARINA +6221 2557 1128 [email protected] Banking Lucky ARIESANDI, CFA +6221 2557 1127 [email protected] Cement Construction Pharmaceutical Retail Adi N. WICAKSONO +6221 2557 1130 [email protected] Generalist Arwani PRANADJAYA +6221 2557 1129 [email protected] Technical analyst
Luz LORENZO Head of Research +63 2 849 8836 [email protected] Strategy Laura DY‐LIACCO +63 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL +63 2 849 8841 [email protected] Consumer Media Cement Kenneth NERECINA +63 2 849 8839 [email protected] Conglomerates Property Ports/ Logistics Katherine TAN +63 2 849 8843 [email protected] Banks Construction
HONG KONG / CHINA Edward FUNG Head of Research +852 2268 0632 [email protected] Power Construction Ivan CHEUNG +852 2268 0634 [email protected] Property Industrial Ivan LI +852 2268 0641 [email protected] Banking & Finance Jacqueline KO +852 2268 0633 [email protected] Consumer Staples Andy POON +852 2268 0645 [email protected] Telecom & related services Samantha KWONG +852 2268 0640 [email protected] Consumer Discretionaries Alex YEUNG +852 2268 0636 [email protected] Industrial
INDIA Jigar SHAH Head of Research +91 22 6623 2601 [email protected] Oil & Gas Automobile Cement Anubhav GUPTA +91 22 6623 2605 [email protected] Metal & Mining Capital goods Property Haripreet BATRA +91226623 2606 [email protected] Software Media Ganesh RAM +91226623 2607 [email protected] Telecom Contractor
4
VIETNAM Michael Kokalari, CFA Head of Research +84 838 38 66 36 x 116 [email protected] Strategy Nguyen Thi Ngan Tuyen +84 838 38 66 36 x 163 [email protected] Conglomerates Confectionary and Beverage Oil and Gas Ngo Bich Van +84 838 38 66 36 x 171 [email protected] Banking Insurance Nguyen Quang Duy +84 838 38 66 36 x 162 [email protected] Industrial Property Trinh Thi Ngoc Diep +84 422 21 22 08 x 102 [email protected] Property & Construction Power Dang Thi Kim Thoa +84 838 38 66 36 x 164 [email protected] Consumer Services Hoang Nam Phu +84 838 38 66 36 x 171 [email protected] Technology & Telecom Transport Resources Truong Quang Binh +84 838 38 66 36 x 169 [email protected] Pharmaceutical Plantation & Fishery
THAILAND Stephen LOWY Head of Research + 662 658 6300 x 4760 [email protected] Watchara SATITPORNUMNUAY + 662 658 6300 x 4770 [email protected] Retail Bank Puttikul ACKARACHALANONTH Utilities
ECONOMICS Luz LORENZO Economist +63 2 849 8836 [email protected] Philippines Indonesia
REGIONAL ONG Seng Yeow +65 6432 1832 [email protected] Regional Products & Planning
Recommendation definitions Our recommendation is based on the following expected price performance within 12 months:
+15% and above: BUY ‐15% to +15%: HOLD ‐15% or worse: SELL
Armstrong Industrials
14 November 2011
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Armstrong Industrials
14 November 2011
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HOLD
Armstrong Industrial
3Q11 Results
Perfect storm
Analyst
Event Armstrong’s 3Q11 results were hard hit by a weak US$, mark‐to‐ market losses on forward forex contracts and higher material costs. We expect the next two quarters to remain weak due to the perfect storm of earthquake and flooding; 4Q11 in particular could be marked by asset impairment losses due to the Thai flooding. However, operating cash flow stayed strong and Armstrong could still declare a dividend, albeit much reduced from last year’s $0.04/share. With the stock trading at around BVPS of $0.195 and almost 5% dividend yield, we maintain our HOLD rating on Armstrong. Our View Year‐on‐year weakness in the US$ has shaved 5ppt off Armstrong’s topline, causing revenue to fall by 3% YoY and gross profit by 19% YoY. The unexpected surge in US$ from S$1.20 to S$1.30 at the end of 3Q11 also resulted in unrealised mark‐to‐market losses of $5.7m. Thus, 3Q11 net profit slid by 90% YoY to $0.5m from $5m a year ago. Operations‐wise, the various businesses showed sequential recovery. Despite the weak US$, data storage managed 4% YoY growth. Consumer electronics fell by 20% YoY on the lingering effects of the March 2011 Japanese earthquake, but nevertheless there was a 5% QoQ improvement. Automotive stood out for its quick recovery from the earthquake, driven by customers in China and Thailand. We expect a weak 4Q11 and 1H12. In particular, the Thai floods are expected to have a direct impact on Armstrong’s data storage business, as well as on its two major customers, Seagate and Western Digital. There is likely to be asset impairment charges in 4Q11 as well. However, cash flow remained strong and we expect a final dividend of $0.01/share, albeit much reduced from last year. Action & Recommendation We cut our earnings forecasts by 47% for FY11 and 27% for FY12, and switch to book value valuation. Assuming 0.9x FY12F BVPS of $0.217, our target price is reduced to $0.19. Maintain HOLD.
Gregory YAP [email protected] (65) 6432 1450
Price Target ST Index
$0.22 $0.19 2,790.94
Historical Chart Vol ('000)
Price ($)
Performance
17‐Oct‐11
14‐Nov‐11
19‐Sep‐11
25‐Jul‐11
22‐Aug‐11
0
27‐Jun‐11
2,000
0.15
30‐May‐11
4,000
0.20
04‐Apr‐11
6,000
0.25
07‐Mar‐11
8,000
0.30
02‐May‐11
10,000
0.35
10‐Jan‐11
12,000
0.40
07‐Feb‐11
14,000
0.45
13‐Dec‐10
0.50
15‐Nov‐10
Absolute (%)
1m ‐8.3
3m ‐15.4
6m ‐42.9
Relative (%)
‐9.9
‐13.6
‐35.2
Stock Information
Ticker code ARMS.SI ARMS SP Market cap (US$m) 88.4 52‐week high (S$) 0.445 52‐week low (S$) 0.215 Shares issued (m) 514.5 6m avg d.vol (US$m) 0.2 Free float (%) 54.3 Major shareholders (%) Ong Family (45.7)
Year End Dec 31 Sales (S$ m) Pre‐tax (S$ m) Net profit (S$ m) EPS (S cts) EPS growth (%) PER (x) EV/EBITDA (x) Yield (%)
Key Indicators
ROE (%) Net cash (S$m) NTA (S$) Interest cover (x)
0.5 5.0 0.19 9.7
2009 173.7 18.8 14.1 2.8 7.1 7.8 5.6 7.3
2010 225.4 33.3 24.9 5.0 76.5 4.4 3.6 18.2
2011F 216.0 11.8 7.6 1.5 ‐69.5 14.5 7.7 4.5
2012F 233.4 19.2 13.3 2.6 74.9 8.3 5.5 4.5
2013F 253.8 22.1 15.3 3.1 15.6 7.2 4.9 4.5
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Co. Reg No: 198700034E MICA (P) : 090/11/2009
Armstrong Industrials
14 November 2011
Figure 1: Latest quarterly results 3 mths ended (S$m)
Sep‐11
Sep‐10
% YoY
Jun‐11
% QoQ
Revenue
56.0
58.0
‐3.4%
52.7
6.3%
Gross profit
12.3
15.1
‐18.7%
11.7
5.1%
Pretax profit
1.7
6.7
‐74.8%
3.5
‐52.0%
Net profit
0.1
4.6
‐97.3%
2.1
‐94.2%
‐3.4
0.2
na
‐0.2
na
Underlying net profit
3.5
4.4
‐19.3%
2.3
55.9%
Underlying EPS (S cts)
0.7
0.9
‐19.2%
0.4
56.6%
DPS (S cts)
0.0
0.0
na
2.0
na
Gross margin (%)
22.0%
26.1%
‐4.1%
22.2%
‐0.2%
Pretax margin (%)
3.0%
11.5%
‐8.5%
6.7%
‐3.6%
Net margin (%)
0.2%
7.8%
‐7.6%
4.0%
‐3.8%
Exceptionals
Source: Company
Figure 2: Sequential improvement in 3Q11 in consumer electronics, office automation and automotive
20.0
Revenue (S$m)
15.0
10.0
5.0
‐ 1Q10
Data Storage
2Q10
3Q10
Consumer Electronics
4Q10
Office Automation
1Q11
2Q11
Automotive
3Q11
Others
Source: Company
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Armstrong Industrials
14 November 2011
Balance Sheet
Profit and loss
YE Dec (S$'m) 2009 2010 Total assets 149.5 164.6 Current assets 108.1 123.1 Cash & ST investment 30.3 26.2 Trade debtors 47.7 55.4 Other debtors 29.7 40.6 Others 0.3 0.9 Other assets 41.4 41.5 LT investments 0.0 0.0 Net fixed assets 40.1 40.2 Other investments 1.3 1.3 Total liabilities 55.7 63.8 Current liabilities 46.4 54.0 Trade creditors 32.4 35.6 ST borrowings 8.0 12.6 Others 6.0 5.8 Long‐term liabilities 9.3 9.8 LT borrowings 2.9 1.8 Others 6.3 8.1 Shareholder's equity 93.8 100.8 Paid‐in capital 48.9 49.6 Reserve 50.6 57.5 Capital adjustment ‐5.7 ‐6.3 Source: Company data, Kim Eng estimates
2011F 175.4 125.7 27.4 53.2 45.1 0.0 49.6 0.0 48.2 1.5 72.1 61.3 35.5 20.0 5.8 10.8 2.0 8.8 103.2 49.6 59.9 ‐6.3
2012F 187.2 129.6 23.8 57.6 48.2 0.0 57.6 0.0 56.2 1.5 75.8 64.2 38.4 20.0 5.8 11.7 2.0 9.7 111.4 49.6 68.1 ‐6.3
2013F 201.7 136.0 21.7 62.6 51.7 0.0 65.6 0.0 64.2 1.5 80.1 67.5 41.7 20.0 5.8 12.6 2.0 10.6 121.6 49.6 78.3 ‐6.3
Key ratios YE Dec Growth (% YoY) Sales OP EBITDA NP
2009 ‐4.8 3.2 5.5 7.1 7.1
2010 2011F 2012F 2013F 29.8 76.2 59.2 77.1 76.5
EPS Profitability (%) Gross margin 25.4 27.5 Operating margin 11.0 14.9 EBITDA margin 14.1 17.3 Net profit margin 8.1 11.0 ROA 9.4 15.1 ROE 15.0 24.7 Stability Gross debt(cash)/equity (%) 11.7 14.2 Net debt(cash)/equity (%) ‐20.6 ‐11.8 Int. coverage (X) 85.1 97.6 Int. & ST debt coverage (X) 3.4 6.0 Cash flow int. coverage (X) 36.2 46.4 Cash flow int. & ST debt (X) 1.5 2.8 Current ratio (X) 2.3 2.3 Quick ratio (X) 1.3 1.3 Net debt/(cash) (S$'m) ‐19.4 ‐11.9 Per share data (cents) EPS 2.8 5.0 CFPS 4.7 7.7 BVPS 18.2 20.1 SPS 33.7 45.0 EBITDA/share 4.8 7.8 DPS 1.6 4.0 Source: Company data, Kim Eng estimates
3
‐4.2 ‐63.6 ‐53.2 ‐69.5 ‐69.5
8.1 61.0 46.4 74.9 74.9
8.7 14.7 14.6 15.6 15.6
22.5 5.7 8.4 3.5 4.3 7.4
23.0 8.4 11.4 5.7 7.1 11.9
23.5 8.9 12.1 6.0 7.6 12.6
21.3 ‐5.2 53.4 3.6 35.2 2.4 2.1 1.2 ‐5.4
19.8 ‐1.7 51.2 3.8 41.3 3.1 2.0 1.1 ‐1.8
18.1 0.2 53.1 4.3 42.8 3.5 2.0 1.1 0.3
1.5 3.5 20.1 42.0 3.5 1.0
2.6 5.1 21.7 45.4 5.2 1.0
3.1 5.9 23.6 49.3 5.9 1.0
YE Dec (S$'m) 2009 2010 2011F 2012F 2013F Sales 173.7 225.4 216.0 233.4 253.8 Cost of goods sold ‐129.5 ‐163.4 ‐167.4 ‐179.7 ‐194.2 Gross profit 44.2 62.0 48.6 53.7 59.6 Other Income 1.6 1.0 2.5 1.0 1.0 Operating expenses ‐24.9 ‐28.4 ‐30.2 ‐32.7 ‐35.5 Operating profit 20.9 34.6 20.9 22.0 25.1 Net interest income ‐0.2 ‐0.4 ‐0.4 ‐0.4 ‐0.5 Share of associates 0.0 0.0 0.0 0.0 0.0 Pretax income 18.8 33.3 11.8 19.2 22.1 Income taxes ‐4.1 ‐6.8 ‐2.5 ‐4.0 ‐4.6 Minority interest ‐0.7 ‐1.6 ‐1.8 ‐1.9 ‐2.1 Net income 14.1 24.9 7.6 13.3 15.3 Exceptionals 0.0 0.0 0.0 0.0 0.0 Net income bef exceptionals 14.1 24.9 7.6 13.3 15.3 EPS (cents) 2.8 5.0 1.5 2.6 3.1 EBITDA 24.5 39.0 18.2 26.7 30.6 Source: Company data, Kim Eng estimates
Cashflow YE Dec (S$'m) 2009 2010 2011F 2012F 2013F Operating cash flow 8.9 16.5 13.7 17.7 20.2 Pretax profit 18.8 33.3 11.8 19.2 22.1 Depreciation & amortisation 5.4 5.4 6.0 7.0 8.0 Change in working capital ‐9.3 ‐14.9 ‐1.6 ‐4.5 ‐5.2 Others ‐6.1 ‐7.2 ‐2.5 ‐4.0 ‐4.6 Investment cash flow ‐3.7 ‐4.2 ‐5.1 ‐4.0 ‐3.0 Net capex ‐4.3 ‐6.6 ‐8.0 ‐8.0 ‐8.0 Change in LT investment 2.0 2.0 3.0 4.0 5.0 Change in other assets ‐1.5 0.5 ‐0.1 0.0 0.0 Cash flow after invt. 5.1 12.3 8.6 13.7 17.2 Financing cash flow ‐1.5 ‐13.9 ‐2.7 ‐13.3 ‐14.4 Change in share capital 0.0 0.6 0.0 0.0 0.0 Net change in debt 3.6 3.4 ‐7.7 0.0 0.0 Change in other LT liab. ‐5.1 ‐17.9 5.0 ‐13.3 ‐14.4 Net cash flow 3.7 ‐1.6 5.9 0.5 2.9 Source: Company data, Kim Eng estimates
ANALYSTS’ COVERAGE / RESEARCH OFFICES SINGAPORE
INDONESIA
PHILIPPINES
Stephanie WONG Head of Research Regional Head of Institutional Research +65 6432 1451 [email protected] Strategy Small & Mid Caps Gregory YAP +65 6432 1450 [email protected] Conglomerates Technology & Manufacturing Transport & Telcos Rohan SUPPIAH +65 6432 1455 [email protected] Airlines Marine & Offshore Wilson LIEW +65 6432 1454 [email protected] Hotel & Resort Property & Construction Anni KUM +65 6432 1470 [email protected] Conglomerates REITs James KOH +65 6432 1431 [email protected] Finance & Banking Logistics Resources Eric ONG +65 6432 1857 [email protected] Marine & Offshore Energy OOI Yi Tung +65 6433 5712 [email protected] Property & Construction YEAK Chee Keong, CFA +65 6433 5730 [email protected] Retail & Consumer Engineering Infrastructure
Katarina SETIAWAN Head of Research +6221 2557 1125 [email protected] Consumer Infra Shipping Strategy Telcos Others Ricardo SILAEN +6221 2557 1126 [email protected] Auto Energy Heavy Equipment Property Resources Rahmi MARINA +6221 2557 1128 [email protected] Banking Lucky ARIESANDI, CFA +6221 2557 1127 [email protected] Cement Construction Pharmaceutical Retail Adi N. WICAKSONO +6221 2557 1130 [email protected] Generalist Arwani PRANADJAYA +6221 2557 1129 [email protected] Technical analyst
Luz LORENZO Head of Research +63 2 849 8836 [email protected] Strategy Laura DY‐LIACCO +63 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL +63 2 849 8841 [email protected] Consumer Media Cement Kenneth NERECINA +63 2 849 8839 [email protected] Conglomerates Property Ports/ Logistics Katherine TAN +63 2 849 8843 [email protected] Banks Construction
HONG KONG / CHINA Edward FUNG Head of Research +852 2268 0632 [email protected] Power Construction Ivan CHEUNG +852 2268 0634 [email protected] Property Industrial Ivan LI +852 2268 0641 [email protected] Banking & Finance Jacqueline KO +852 2268 0633 [email protected] Consumer Staples Andy POON +852 2268 0645 [email protected] Telecom & related services Samantha KWONG +852 2268 0640 [email protected] Consumer Discretionaries Alex YEUNG +852 2268 0636 [email protected] Industrial
INDIA Jigar SHAH Head of Research +91 22 6623 2601 [email protected] Oil & Gas Automobile Cement Anubhav GUPTA +91 22 6623 2605 [email protected] Metal & Mining Capital goods Property Haripreet BATRA +91226623 2606 [email protected] Software Media Ganesh RAM +91226623 2607 [email protected] Telecom Contractor
4
VIETNAM Michael Kokalari, CFA Head of Research +84 838 38 66 36 x 116 [email protected] Strategy Nguyen Thi Ngan Tuyen +84 838 38 66 36 x 163 [email protected] Conglomerates Confectionary and Beverage Oil and Gas Ngo Bich Van +84 838 38 66 36 x 171 [email protected] Banking Insurance Nguyen Quang Duy +84 838 38 66 36 x 162 [email protected] Industrial Property Trinh Thi Ngoc Diep +84 422 21 22 08 x 102 [email protected] Property & Construction Power Dang Thi Kim Thoa +84 838 38 66 36 x 164 [email protected] Consumer Services Hoang Nam Phu +84 838 38 66 36 x 171 [email protected] Technology & Telecom Transport Resources Truong Quang Binh +84 838 38 66 36 x 169 [email protected] Pharmaceutical Plantation & Fishery
THAILAND Stephen LOWY Head of Research + 662 658 6300 x 4760 [email protected] Watchara SATITPORNUMNUAY + 662 658 6300 x 4770 [email protected] Retail Bank Puttikul ACKARACHALANONTH Utilities
ECONOMICS Luz LORENZO Economist +63 2 849 8836 [email protected] Philippines Indonesia
REGIONAL ONG Seng Yeow +65 6432 1832 [email protected] Regional Products & Planning
Recommendation definitions Our recommendation is based on the following expected price performance within 12 months:
+15% and above: BUY ‐15% to +15%: HOLD ‐15% or worse: SELL
Armstrong Industrials
14 November 2011
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Armstrong Industrials
14 November 2011
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