NPTM Holdings Bhd
(June 22, 70 sen)
Maintain neutral with an unchanged target price of 63 sen: NTPM ended the year on a better note, seeing margin improvements in the fourth quarter ended April of financial year 2015 (4QFY15). The full FY15 registered revenue of RM547.5 million, which was broadly within expectations, accounting for 94% of our estimates. Earnings, on the other hand, surpassed our expectations by 2% to record RM42.6 million. 

Continuing the previous quarter’s stronger performance, we attribute these positive results to aggressive cost control measures undertaken by the group, particularly in staff and utilities costs, through better planning and optimisation of resources. 

Coupled with its recent foothold in the Vietnam market, we believe the group is on the right track to grow further as a tissue and personal care manufacturer, especially as NTPM continues with its plans to expand its presence in the Indochina region. We do expect the group to be affected by the weakening ringgit as 20% of its costs are denominated in US dollars.

NTPM’s paper products segment registered revenue of RM384.4 million for FY15, 1.1% higher year-on-year (y-o-y) from RM380.6 million. Profit before tax (PBT) for FY15 declined 12.3% y-o-y to record RM49.2 million. Despite that, the segment’s 4QFY15 numbers saw improvement at both revenue and PBT levels, with PBT margins at 15.4% compared with 11.9% in 4QFY14, mainly due to better management of costs.

Meanwhile, FY15 revenue for the group’s personal care products segment rose to RM163.2 million, up 1.5% compared with RM160.8 million in FY14, mainly attributed to better sales of adult diapers. PBT for FY15 saw a y-o-y decrease by 26.6% to RM10.1 million. 

On a quarterly level, personal care products’ PBT increased by 25% y-o-y to RM3.9 million, which illustrates NTPM’s fruitful efforts to move the group forward. — PublicInvest Research, June 22

This article first appeared in The Edge Financial Daily, on June 23, 2015.