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PP 7767/09/2010(025354)

1 March 2010

Malaysia Corporate Highlights


RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su l ts N o t e
1 March 2010
MARKET DATELINE

Bonia Corporation Share Price


Fair Value
:
:
RM1.05
RM1.33
Margin Recovery In Sight Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (BONIA; Code: 9288) Bloomberg: BON MK


Net EPS Net
FYE Revenue Profit EPS Growth PER C.EPS* P/NTA P/CF ROE Gearing GDY
June (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (x) (%)
2009a^ 314.9 23.6 11.7 -17.5 9.0 - 1.2 8.5 12.1 Net cash 7.6
2010f 342.6 29.8 14.8 26.1 7.1 14.0 1.1 11.1 16.0 Net cash 7.6
2011f 368.8 36.2 17.9 21.5 5.9 15.0 1.0 6.5 17.6 Net cash 9.5
2012f 401.0 42.3 21.0 17.0 5.0 18.0 0.9 6.8 18.5 Net cash 11.4
Main Board Listing / Non-Trustee Stock / Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates
^Core net profit

♦ Within expectations. Bonia’s 1HFY06/10 net profit of RM14.3m RHBRI Vs. Consensus
(+34.0%) was within our and consensus expectations, accounting for 48% Above

and 52% of our and consensus estimates, respectively. As expected, no In Line


Below
dividend was declared during the quarter.
Issued Capital (m shares) 201.6
♦ Yoy, net profit jumped by 34% on the back of: 1) 11.6% yoy increase in
Market Cap(RMm) 211.7
Daily Trading Vol (m shs) 0.0
revenue due to increase in boutique sales from Mega Sales, Hari Raya and
52wk Price Range (RM) 0.68-1.43
Christmas festivities; and 2) +0.7%-pt improvement in EBIT margin due to Major Shareholders: (%)
better control in overhead operations. The topline growth was attributable
Chiang family 30
to the opening of 5 new boutiques, contributing about one-third of the PNB 10
growth while the rest came from existing boutiques and consignment Arisaig Asean Fund 8
counters. Meanwhile, 1H10 gross profit margin was at 56% (vs. 1H09: FYE June FY10 FY11 FY12
52%), indicating that the gross profit margin levels are getting closer to EPS chg (%) 0.0 0.0 0.0
management’s target of 60%. Var to Cons (%) 5.5 19.6 16.6

PE Band Chart
♦ Future prospects. Moving forward, we believe Bonia’s sales would
improve in view of indicators that consumers are becoming more PER = 16x
PER = 12x
optimistic. Bonia has an internal target of RM500m revenue and RM50m PER = 8x
net profit to be achieved by FY13, which we believe is achievable assuming
gradual economic recovery.

♦ Forecasts. No changes to our earnings forecasts. However, we increased


our net dividend payout to 40% in view of its expanding net cash balance
as well as the higher net dividend payout in FY09. Relative Performance To FBM KLCI

♦ Risks to our view. The risks include: 1) weak consumer sentiment and Bonia

consumer spending; 2) forex risk; 3) cash flow constraint as Bonia has a


long debtor collection period of 85 days; and 4) cannibalisation of own
FBM KLCI
brands vs licensed brands.

♦ Investment case. Bonia has fully paid off its RM30m term loan in FY09
and given the expanding net cash position, we believe Bonia would be able
to maintain its net dividend payout of 50% in FY09 (from 11-26% in FY05- Coverage Under CMDF-Bursa
Research Scheme
08) going forward. No changes to our indicative fair value of RM1.33 based
on unchanged target PER of 9x, representing the lower end of its historical Hoe Lee Leng
PE band of 9-15x. Maintain our Outperform recommendation on Bonia. (603) 92802239
hoe.lee.leng@rhb.com.my

Please read important disclosures at the end of this report. Page 1 of 3

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1 March 2010

Table 2: Earnings Review (YoY)


FYE June 2009 2010 2010 %QOQ %YoY 2009 2010 %YoY Observation/ Comments
(RMm) 2Q 1Q 2Q Gwt Gwt 6M 6M Gwt

Revenue 76.8 95.2 90.0 (5.5) 17.2 165.9 185.2 11.6 Boosted by increase in boutique
sales and the opening of 5 new
boutiques during the period.

The topline growth was attributable


to the opening of 5 new boutiques,
contributing about one-third of the
growth while the rest came from
existing boutiques and
consignment counters.

EBIT 9.0 11.3 11.0 (2.1) 23.1 18.9 22.3 18.2 Higher sales and improvement in
EBIT margin.
Finance cost (1.6) (0.8) (0.8) (5.8) (51.5) (2.9) (1.6) (45.3) Lower yoy due to increase in net
cash by RM11.6m.
Associate 0.0 0.0 0.0 - - (0.0) 0.0 -
EI 0.0 0.0 0.0 - - 0.0 0.0 -
PBT 7.4 10.5 10.3 (1.8) 38.8 16.0 20.7 29.9
PBT ex-EI 7.4 10.5 10.3 (1.8) 38.8 16.0 20.7 29.9 Filtered down from EBIT and lower
interest costs.
Taxation (2.4) (3.3) (3.3) (0.2) 34.3 (5.0) (6.5) 30.9
MI (0.2) (0.0) 0.2 >(100) >(100) (0.3) 0.1 >(100)
Net profit 4.7 7.2 7.2 0.2 51.3 10.7 14.3 34.0
Net profit ex- 4.7 7.2 7.2 0.2 51.3 10.7 14.3 34.0 Filtered down from PBT and higher
EI effective tax rate.
EPS 2.4 3.6 3.6 0.0 51.1 5.3 7.1 34.0
GDPS 0.0 0.0 0.0 - - 0.0 0.0 -

EBIT margin 11.7 11.8 12.3 0.4 0.6 11.4 12.0 0.7 Yoy improvement due to better
(%) control of the overhead costs.
PBT margin 9.6 11.0 11.4 0.4 1.8 9.6 11.2 1.6
(%)
Net profit 6.2 7.5 8.0 0.5 1.8 6.4 7.7 1.3
margin (%)
Effective tax 32.9 31.3 31.8 0.5 (1.1) 31.3 31.6 0.2 Higher effective tax rate due
rate (%) mainly to tax losses on certain
subsidiary companies and expenses
which are not tax deductible.
Source: Company data, RHBRI

Table 3. Earnings Forecasts Table 4. Forecast Assumptions


FYE Jun (RMm) FY09 FY10F FY11F FY12F FYE Jun FY10F FY11F FY12F
Turnover 314.9 342.6 368.8 401.0 New point-of-sales 39 12 25
Cost of good sold -135.8 -145.6 -154.9 -166.4 Number of point-of-sales 745 757 782
Gross profit 179.1 197.0 213.9 234.6 Gwt in rev/outlet – Overseas (%) 10.0 8.0 2.0
Gwt in rev/outlet – Malaysia (%) 6.0 5.0 5.0
EBITDA 46.8 56.5 62.7 70.2
EBITDA margin (%) 14.9 16.5 17.0 17.5

Depreciation -12.1 -12.4 -12.2 -11.4


Finance cost -5.1 -3.0 -1.2 -1.2
Associate -0.2 -0.2 -0.2 -0.2

Pretax profit 29.5 40.9 49.1 57.4


Taxation -8.5 -10.6 -12.3 -14.4
Minority interest -0.5 -0.5 -0.6 -0.7
Net profit 23.6 29.8 36.2 42.3
Source: Company data, RHBRI estimates

Page 2 of 3

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1 March 2010

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be
contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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