[StarBiz] MIDF Research sees higher revenue for Daibochi
13 August 2015
KUALA LUMPUR: MIDF Research expects further revenue growth and increased efficiency for Daibochi Plastic and Packaging Industry Bhd (Daibochi), underpinned by new product and new potential customers.
The research house, which maintained its Neutral call on Daibochi with an unchanged target price of RM3.83 per share, said on Thursday its valuation was premised on the dividend discount model, with a cost of equity of 9.27% and terminal growth of 4.0%.
“Going forward, we expect further top line growth from the new product introduced in Australia, new potential customers in the Asean region, and the increased efficiency of the company.
“However, the group is expected to be impacted by the volatility in currency exchange rates and raw material prices,” it said.
MIDF Research said Daibochi’s 2QFY15 earnings were within its and consensus’ expectations.
“Its cumulative 1HFY15 earnings accounts for 51.8% and 47.9% of ours and consensus full year forecasts respectively,” it said.
The group’s 2QFY15 revenue increased by 3.1% year on year, while revenue for 2QFY15 increased to RM89.7mil.
This increase, it said, was due to higher export sales to Australia and New Zealand, which increased by 33.5% on-year and 80.6% on-year respectively.
Its 2QFY15 earnings growth outpaced revenue at 15.7% on-year.
“This was mainly due to improved margins on higher export sales, weaker Ringgit and favourable product mix,” it said.
The group declared dividend of four sen per share and its tax-exempt dividend for FY15 of four sen per share, translating into a total dividend of 7.5 sen per share for 1HFY15.
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