Wednesday, May 4, 2011

BSLCorp ... May11

Inet Research:-

1. 2QFY11 Results Review
 BSL’s revenue in 2QFY11 rose 24.7% to RM46.8 million from RM37.5 million in 2QFY10, mainly driven by growth in the precision metal stamping and automotive component manufacturing divisions.

 Growth in the precision metal stamping division was mainly due to higher orders for stamped metal parts for products such as LCD TVs while the automotive component manufacturing achieved higher sales due to contribution from a newly secured client in the quarter under review.

 Operating profit in 2QFY11 declined 62.3% y-o-y, but note that profit in 2QFY10 was boosted by some RM2.3 million gains from the disposal of two pieces of industrial land and building. Stripping out this disposal gain, the operating profit in 2QFY11rose slightly to RM1.3 million from RM1.2 million previously.

 Operation-wise, there were several factors that depressed core earnings in 2QFY11.
o In the precision metal stamping division, the higher number of public holidays in 2QFY11 (December 2010 – February 2011 period) resulted in higher wages, as production had to continue during public holiday to ensure timely delivery of orders.

o In the PCB assemble division, a complete audio set assembly operation commenced in end- November 2010. As such, there is set-up and additional operating cost. This has resulted in the division to have an operating loss of RM1.1 million in 2QFY11, compared with operating profit of RM0.7 million in the 1QFY11. The production line has also yet to achieve optimal efficiency level. BSL management expects this operation to breakeven in 3QFY11 and be in black in 4QFY11. Apart from this new contract, there was also less assembly work for other home appliances, as 2QFY10 is seasonally a quiet period.

 Despite the weak 2QFY11 results, BSL’s 1HFY11’s results are still commendable. BSL’s 1HFY11
revenue grew 21.2% y-o-y to RM96.6 million. Operating profit declined 7% to RM5.6 million while net
profit down slightly by 3.1% to RM3.5 million.

 BSL’s 1HFY11 results showed that it achieved high double digit topline growth. In terms of bottomline,
its profits from operations in 1HFY11 were comparable with the numbers in 1HFY10 that were boosted
by recognition of gains.

 Stripping out the gains in 1HFY10, its operating profit in 1HFY11 grew 51.4% y-o-y, as opposed to a
decline of 7%.

2. Key Investment Risks
 The earthquake and tsunami in Japan in early March could disrupt production of its Japanese customers,
which would in turn affect BSL’s orderbook.

 The demand for electrical and electronics products may be thwarted by rising commodity, fuel and food
prices that could reduce consumers’ spending power.

 While BSL has expanded its product range to cater for the poultry and automotive sectors, about 75% of
Group revenue is still derived from the electrical and electronics sector, whose recovery is susceptible to
the health of global economies that are currently under inflationary pressures.

3. Earnings Outlook
 Due to the recent natural disaster in Japan, BSL’s clients, mainly Japanese electronics companies such as
Panasonic, Sony and JVC are adjusting the production of their product models to ensure operations can
continue with minimal disruptions. As such, according to BSL management, their monthly orders in
terms of volume are still similar or slightly higher than the same period a year earlier. For now, BSL
management is still fairly confident that its production will not be adversely affected.

 The market for electronics products such as LCD TVs and Blu Ray players remains buoyant, and the
second half of the year is usually a peak period for BSL if its principal customers can avoid any
production disruptions as a result of the earthquake in Japan.

 Due to the commendable growth achieved in 1HFY11 (considering the recognition of gains in 1HFY10)
and expectation of better performance in the second half of the year being the busier period seasonally,
we are maintaining our forecast of net profit of RM9.7 million and RM10.8 million in FY11and FY12
respectively, from RM8.3 million in FY10. Our forecast is underpinned by growth in the precision
stamping division and other divisions remaining in the black, providing that there is no major disruption in
production.

4. Valuation
 Since our initiation report in early March, BSL is still trading at about 37 sen. This translates to historical
price to earnings ratio of 4.4 times based on earnings per share of 8.4 sen in FY10. Based on forecast EPS
of 9.9 sen and 11.1 sen in FY11 and FY12 respectively, it is trading at forward PE of 3.7 times and 3.3
times.

5. Recommendation
 We are maintaining a BUY call on BSL with a target price of 60 sen, imputing a PER of six times on
forecast EPS of 9.9 sen in FY11. The valuation implies an over 50% discount to the valuation of general
market, taking into consideration BSL’s small market capitalisation and lack of trading liquidity.

 The next two quarters will be crucial for BSL to demonstrate its ability to cooperate with its Japanese
clients to ensure continuous production. If this is the case, we expect BSL’s profitability to remain intact.

61 comments:

Anonymous said...

xanax pills buy xanax kuala lumpur - xanax withdrawal tips

Anonymous said...

buy tramadol online tramadol pill identification 627 - get high tramadol 50mg

Anonymous said...

generic xanax klonopin vs xanax effects - pictures of generic xanax pills

Anonymous said...

buy tramadol online tramadol 50mg tablets what is it used for - tramadol 50 mg bluelight

Anonymous said...

alprazolam no prescription generic form of xanax - xanax recreational use effects

Anonymous said...

buy xanax online xanax and weight gain - xanax xr withdrawal side effects

Anonymous said...

tramadol online no prescription generic tramadol 100mg - can you get tramadol online legally

Anonymous said...

where to buy xanax online no prescription small round white pill xanax - buy xanax mc

Anonymous said...

xanax online buy xanax online in the uk - cheap generic xanax online

Anonymous said...

xanax online long will 2mg xanax last - xanax dosage for children

Anonymous said...

buy tramadol online get cheap tramadol - maximum dosage tramadol 24 hours

Anonymous said...

generic xanax xanax online pakistan - xanax dosage

Anonymous said...

buy carisoprodol carisoprodol 350 mg is used for - soma carisoprodol tablets used

Anonymous said...

where can i buy xanax online xanax 5mg side effects - buy xanax 3mg

Anonymous said...

buy tramadol online buy tramadol online next day delivery - european online pharmacy tramadol

Anonymous said...

buy tramadol online tramadol for dogs 100mg - tramadol 50 mg and aleve

Anonymous said...

xanax for sale without prescription xanax drug test facts - xanax class of drug

Anonymous said...

buy tramadol online buy generic tramadol no prescription - buy tramadol online cheap

Anonymous said...

where can i order xanax online generic xanax gg 258 - xanax withdrawal ringing ears

Anonymous said...

carisoprodol 350 mg carisoprodol generic for soma - carisoprodol 350 mg tabs

Anonymous said...

buy carisoprodol carisoprodol 350 mg strength - carisoprodol soma abuse

Anonymous said...

buy tramadol cod can buy tramadol usa - tramadol no prescription free delivery

Anonymous said...

buy tramadol online buy tramadol online no prescription usa - tramadol 50 mg white pill

Anonymous said...

buy carisoprodol where to buy carisoprodol online - caridoxen naproxeno carisoprodol side effects

Anonymous said...

cialis buy online no prescription order cialis online paypal - generic cialis good real thing

Anonymous said...

xanax online xanax xr online pharmacy - generic xanax stamped g3721

Anonymous said...

cialis online online pharmacy for cialis review - cialis joke video

Anonymous said...

cialis online order real cialis online - get prescription cialis online

Anonymous said...

xanax online what type of drug is alprazolam (xanax) - xanax alprazolam 0.5mg

Anonymous said...

cialis online cialis 30 mg - where to order cialis online safe

Anonymous said...

buy tramadol online buy tramadol online in australia - tramadol buyers

Anonymous said...

buy tramadol tramadol buy online no prescription mastercard - tramadol used withdrawal

Anonymous said...

can you buy tramadol online tramadol hcl tab 50mg side effects - tramadol used no prescription

Anonymous said...

buy tramadol venta tramadol online - tramadol rx purchase

Anonymous said...

buy tramadol tramadol jaw pain - will 100mg tramadol do

Anonymous said...

buy tramadol tramadol 50mg vs 100mg - tramadol 50mg over counter

Anonymous said...

buy tramadol order tramadol us pharmacy - tramadol hcl 50 mg reviews

Anonymous said...

buy tramadol online tramadol dosage 150 mg - tramadol withdrawal hot flashes

Anonymous said...

buy tramadol tramadol mg - can you buy tramadol online in usa

Anonymous said...

buy tramadol buy tramadol online mastercard overnight - generic brand for tramadol

Anonymous said...

http://landvoicelearning.com/#74967 tramadol hcl 50 mg withdrawal - buy tramadol online with paypal

Anonymous said...

buy tramadol tramadol hcl vs.tylenol 3 - buy tramadol online pharmacy

Anonymous said...

buy tramadol buy cheap tramadol cod - tramadol for dogs pain

Anonymous said...

buy tramadol online next day tramadol discount - tramadol 50mg generic for ultram

Anonymous said...

buy tramadol naltrexone for tramadol addiction - tramadol equivalent

Anonymous said...

buy discount tramadol order tramadol money order - best place to buy tramadol online reviews

Anonymous said...

buy tramadol online tramadol for dogs how much to give - tramadol is generic for what drug

Anonymous said...

http://blog.dawn.com/dblog/buy/#side-effects tramadol 93 58 - tramadol withdrawal period

Anonymous said...

http://reidmoody.com/#49853 treatment of ativan withdrawal - 1mg lorazepam much xanax

Anonymous said...

buy ativan online ativan side effects urination - ativan vs valium high

Anonymous said...

buy tramadol free shipping tramadol online in usa - tramadol 50 mg tablets dosage

Anonymous said...

http://ranchodelastortugas.com/#37284 order xanax from overseas - buy alprazolam 3mg

Anonymous said...

http://staam.org/#36750 order tramadol from the usa - get high tramadol 50mg

Anonymous said...

buy xanax online xanax side effects dizziness - buy xanax no prescription legal

Anonymous said...

http://staam.org/#21236 tramadol withdrawal peak - tramadol generic ultracet

Anonymous said...

buy tramadol next day what is generic name for tramadol - buy tramadol online no prescription cod

Anonymous said...

purchase xanax xanax effects bluelight - xanax for anxiety symptoms

Anonymous said...

buy xanax online xanax online yahoo - xanax reviews 2012

Anonymous said...

http://bayshorechryslerjeep.com/#2902 prozac xanax and alcohol - generic xanax gg 256

Anonymous said...

buy xanax online xanax 0.25 side effects - xanax withdrawal chest pain

Anonymous said...

xanax no rx buy xanax mexico online - long does 1mg xanax stay system