DRBHCOM (1619) - DRB-Hicom- Boosted by new acquisitions
Target RM2.30 (Stock Rating: HOLD)
DRB’s 9MFY15 core net earnings came in within expectation, making up 75% of our full-year forecast, but lower than consensus at 67%. A 1.50 sen interim dividend was declared, as expected. Proton’s continued losses continues to drain the group’s financials, although this was buffered by strong performances at the group’s other businesses. Nonetheless, we believe the bleeding at Proton is a major concern for the group, and it has to be addressed quickly. We make no changes to our EPS forecasts, and maintain our NTA-based target price for the stock. We reiterate our Hold recommendation. Switch to Berjaya Auto, our top pick for the sector.
Auto division driven by Honda and CTRM
DRB’s 9MFY3/15 pre-tax earnings dropped 9.2% yoy to RM457.7m even though its revenue increased by 4.4% yoy to RM10.5bn. The continued losses in Proton continued to be a drag on DRB’s earnings, as it was affected by the increasingly competitive local auto sector, causing its volume to tumble 20% yoy in 9MFY15 to 83,049 units. However, this was buffered by the strong sales of Honda, which saw its sales volume surge 51% yoy to 61,868 units. Overall, the auto segment’s revenue grew by 4.8% yoy to RM8.2bn, mainly due to the 250% yoy surge in revenue to RM1.6bn at its defence and aviation business, which can be attributed to the progress of its Deftech AV8 contract and full recognition of CTRM in FY14.
Services segment boosted by concession
Although the services segment’s revenue only edged up 0.9% yoy to RM2.0bn, which was mainly due to the sale of its insurance business, the group’s concession businesses recorded commendable growth. Alam Flora’s revenue jumped 40% yoy to RM547.1m, while revenue for KL Airport Services (KLAS) surged 78% yoy to RM319.8m as its business was boosted by the group’s recent acquisition of Konsortium Logistik Bhd.
Strong property sales
The group’s property, asset and construction division had a highly satisfactory 9MFY15, which saw its revenue increasing by 26% yoy to RM237.9m. This was contributed mainly by the property division, which grew by 31% in revenue to RM191.9m, as a result of increased contribution from its ongoing property development projects.
Source: CIMB Daybreak - 27 February 2015
Target RM2.30 (Stock Rating: HOLD)
DRB’s 9MFY15 core net earnings came in within expectation, making up 75% of our full-year forecast, but lower than consensus at 67%. A 1.50 sen interim dividend was declared, as expected. Proton’s continued losses continues to drain the group’s financials, although this was buffered by strong performances at the group’s other businesses. Nonetheless, we believe the bleeding at Proton is a major concern for the group, and it has to be addressed quickly. We make no changes to our EPS forecasts, and maintain our NTA-based target price for the stock. We reiterate our Hold recommendation. Switch to Berjaya Auto, our top pick for the sector.
Auto division driven by Honda and CTRM
DRB’s 9MFY3/15 pre-tax earnings dropped 9.2% yoy to RM457.7m even though its revenue increased by 4.4% yoy to RM10.5bn. The continued losses in Proton continued to be a drag on DRB’s earnings, as it was affected by the increasingly competitive local auto sector, causing its volume to tumble 20% yoy in 9MFY15 to 83,049 units. However, this was buffered by the strong sales of Honda, which saw its sales volume surge 51% yoy to 61,868 units. Overall, the auto segment’s revenue grew by 4.8% yoy to RM8.2bn, mainly due to the 250% yoy surge in revenue to RM1.6bn at its defence and aviation business, which can be attributed to the progress of its Deftech AV8 contract and full recognition of CTRM in FY14.
Services segment boosted by concession
Although the services segment’s revenue only edged up 0.9% yoy to RM2.0bn, which was mainly due to the sale of its insurance business, the group’s concession businesses recorded commendable growth. Alam Flora’s revenue jumped 40% yoy to RM547.1m, while revenue for KL Airport Services (KLAS) surged 78% yoy to RM319.8m as its business was boosted by the group’s recent acquisition of Konsortium Logistik Bhd.
Strong property sales
The group’s property, asset and construction division had a highly satisfactory 9MFY15, which saw its revenue increasing by 26% yoy to RM237.9m. This was contributed mainly by the property division, which grew by 31% in revenue to RM191.9m, as a result of increased contribution from its ongoing property development projects.
Source: CIMB Daybreak - 27 February 2015
