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Thursday, February 21, 2019

SAMEE - 3Q19 Meet Expectation, Wary of Semiconductor Demand Outlook

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3QFY19 higher revenue and PBT but lower PAT due to higher tax

SAMEE 3Q19 posted higher revenue (yoy:+23.6%, qoq:+1.1%) and PBT (yoy:+1.2%, qoq:+4.1%) but lower PAT due to higher tax (yoy:-7.5%, qoq:+9.9%). Overall result meet expectation as cumulative 3Q19 earnings accounting for 75.8% of our FY19 full year earnings estimates.

Aerospace Segment revenue up 25.3% while EBIT down 2.6% yoy

Aerospace revenue increased 25.3% yoy due to higher demand for casing products for business jets, increase in deliveries of prismatic parts and favorable exchange offsetted lower deliveries of casing products for older aircraft program however posted lower EBIT -2.6% yoy but higher EBIT qoq +5.6% due to higher cost incurred for the production ramp up for the manufacturing launch of the casing products and unfavorable product mix. We think this is temporary and normalise in coming quarters.

Equipment Segment revenue up 20.9% and EBIT up 13.2% yoy

Equipment Segment posted higher revenue and EBIT yoy by 20.9% and 13.2% respectively due to better contribution from HDD businesses nonetheless the management expect equipment segment to register lower revenue in coming quarters due to softer demand from semiconductor and HDD industry and expect the hard disk drive storage segment to recover in next financial year.

Maintain BUY with unchanged TP of RM11.30

Group gearing ratio stood at to 0.2x which is low and healthy and has ample room to gear for growth should opportunity arises. We maintained our earnings forecast and BUY recommendation with unchanged TP of RM11.30 based on 10.7x on our estimated EPS for FY19F.
Source: Mercury Research - 21 Feb 2019

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