BONIA (9288) - Bonia Corporation - Still the ladies’ favourite
Target RM1.43 (Stock Rating: ADD)
At 47% of our and consensus full-year forecasts, we deem Bonia’s 1HFY6/15 net profit broadly in line, due to the anticipated pick-up in sales in 3QFY15 from the pre-GST sales campaign. As expected, no dividend was declared. Bonia’s overseas expansion continues to be the bright spot in the face of the challenging local operating environment. We make no changes to our FY15-17 EPS forecasts, and maintain our target price, derived from 16.3x CY16 P/E (on par with the sector average). We reiterate our Add recommendation, with improvement in domestic consumer sentiment and higher-than-expected sales growth as potential re-rating catalysts.
Reaping the benefits of regional ventures
Bonia’s expansion into other markets in the Asian region continues to bear fruit. Its Vietnam operations recorded a 42.5% yoy jump in revenue to RM9.6m in 1HFY15, while Indonesia operations posted revenue growth of 13.6% yoy to RM13.9m. This resulted in Indonesian pretax profit of RM1.4m, a turnaround from the RM0.3m loss in 1HFY14. Bonia’s outright exports to Saudi Arabia also improved significantly in 2QFY15, with a 221% qoq surge in revenue to RM2.0m. However, its Singapore operations registered flat revenue growth yoy to RM88.8m in 1HFY15.
Local market remains challenging
In its Malaysian home market, Bonia still faces a challenging operating environment, mainly due to the weak consumer sentiment. Its Malaysian sales revenue slid 2.3% qoq to RM114.6m, leading to a 2.8% yoy drop in 1HFY15 revenue to RM232.0m. This was compounded by a 4.6% yoy increase in selling, general and administrative expenses, mainly attributed to the increase in boutique rental and staff costs, as well as the one-off provision for litigation costs of RM1.5m for its trademark dispute in China.
Pre-GST sales to spur domestic revenue
Although we believe that the weak consumer sentiment will persist throughout 1HCY15, we expect Bonia’s sales to be boosted by the pre-goods and services tax (GST) sales promotions and campaigns in 3QFY15. In our view, the company will go all-out to capitalise on the anticipated increase in consumer spending prior to the GST that will take effect on 1 April 2015. The implementation of the GST is expected to lead to temporary slowdown in domestic demand.
Source: CIMB Daybreak - 26 February 2015
Target RM1.43 (Stock Rating: ADD)
At 47% of our and consensus full-year forecasts, we deem Bonia’s 1HFY6/15 net profit broadly in line, due to the anticipated pick-up in sales in 3QFY15 from the pre-GST sales campaign. As expected, no dividend was declared. Bonia’s overseas expansion continues to be the bright spot in the face of the challenging local operating environment. We make no changes to our FY15-17 EPS forecasts, and maintain our target price, derived from 16.3x CY16 P/E (on par with the sector average). We reiterate our Add recommendation, with improvement in domestic consumer sentiment and higher-than-expected sales growth as potential re-rating catalysts.
Reaping the benefits of regional ventures
Bonia’s expansion into other markets in the Asian region continues to bear fruit. Its Vietnam operations recorded a 42.5% yoy jump in revenue to RM9.6m in 1HFY15, while Indonesia operations posted revenue growth of 13.6% yoy to RM13.9m. This resulted in Indonesian pretax profit of RM1.4m, a turnaround from the RM0.3m loss in 1HFY14. Bonia’s outright exports to Saudi Arabia also improved significantly in 2QFY15, with a 221% qoq surge in revenue to RM2.0m. However, its Singapore operations registered flat revenue growth yoy to RM88.8m in 1HFY15.
Local market remains challenging
In its Malaysian home market, Bonia still faces a challenging operating environment, mainly due to the weak consumer sentiment. Its Malaysian sales revenue slid 2.3% qoq to RM114.6m, leading to a 2.8% yoy drop in 1HFY15 revenue to RM232.0m. This was compounded by a 4.6% yoy increase in selling, general and administrative expenses, mainly attributed to the increase in boutique rental and staff costs, as well as the one-off provision for litigation costs of RM1.5m for its trademark dispute in China.
Pre-GST sales to spur domestic revenue
Although we believe that the weak consumer sentiment will persist throughout 1HCY15, we expect Bonia’s sales to be boosted by the pre-goods and services tax (GST) sales promotions and campaigns in 3QFY15. In our view, the company will go all-out to capitalise on the anticipated increase in consumer spending prior to the GST that will take effect on 1 April 2015. The implementation of the GST is expected to lead to temporary slowdown in domestic demand.
Source: CIMB Daybreak - 26 February 2015
