KUALA LUMPUR (Aug 23): BP Plastics Holding Bhd’s share price opened up 10% in Bursa Malaysia morning trade today after the packaging material manufacturer declared last Friday (Aug 20) total dividends of three sen a share and reported a second-quarter net profit rise.
The counter, which was among the top ten gainers this morning, rose as much as 30 sen or 15.79% to RM2.20.
At 10.43am, the counter pared some gains at RM2.08, still up 18 sen or 9.47%. The counter saw 3.88 million shares traded.
BP Plastics has soared 50.72% from RM1.38 on May 25.
Last Friday, the group announced that its net profit for the second quarter ended June 30, 2021 (2QFY21) surged 74.39% to RM14.77 million from RM8.47 million a year ago, mainly due to higher sales and better product mix.
The group also saw its quarterly revenue climb 35.69% to RM108.95 million from RM80.29 million, due to stronger product demand.
The group proposed a second single tier interim dividend of two sen and a special single tier dividend for the financial year ending Dec 31, 2021 (FY21). This has brought the group’s first half dividend to six sen.
The entitlement date for both dividends is fixed on Sept 22 and payment will be made on Oct 8.
For the half year ended June 30, 2021, the group’s net profit jumped 66.39% to RM24.44 million from RM14.69 million a year earlier, while revenue increased by 32.38% to RM209.01 million, from RM157.89 million.
In a research note today, Kenanga Research’s analyst Lim Khai Xhiang raised the group’s FY21 to FY22 estimated core net profit by 25% to 27% as he remained bullish on the group’s continued growth from robust demand and capacity expansion.
He also introduced a new dividend per share (DPS) of 10 sen each for FY21 and FY22, implying a 5.3% yield.
He said the group’s first half core net profit of RM24.6 million exceeded his expectation, at 68% of his FY21 estimate.
Meanwhile, the group’s first half dividend per share (DPS) of six sen also beat his forecast at 67% of his FY21 estimated DPS of nine sen.
Despite the prolonged lockdown and the 60% workforce limit, Lim said the group is still able to maintain its resilient earnings on the back of robust demand, elevated average selling prices (ASPs) amidst fluctuating resin costs.
Besides, its capacity expansion plan (ninth Cast Stretch Film machine) is still on track and is slated to start production in late 4QFY21.
As the National Immunization Programme roll-out completes and economy re-opens, Lim opined that it will allow the group to resume to its usual workforce.
“Thus, we believe that the group will be able to deliver resilient earnings in the second half,” he said.
He maintained an "outperform" call on the stock and revised up its target price to RM3.15 from RM2.50 based on FY21 estimated earnings per share of 24.1 sen and an ascribed price-to-earnings ratio of 13 times.
He believes the group deserves the valuation premium for robust demand from export and local markets, larger customer base, and capacity expansion for its premium stretch film.
“The group also offers an attractive dividend yield of 5.3%, which is above the industry average of 3%,” he said.