• Maintain BUY, with an unchanged DCF-backed SGD0.46 Target Price, 35% upside.
• Kimly reported a steady topline growth of 4.2% y-o-y, while 3QFY18 PATMI was down 4.8% y-o-y on PPE depreciation costs. We expect a better 4QFY18 ahead, mainly on contributions from its recent acquisition: Asian Story Corp (ASC).
• With SGD60m-plus in cash remaining after the acquisition, we think there will likely be more similar-styled acquisitions to come – this should further propel Kimly’s profitability.

3QFY18 (Sep) Impacted by Expenses

Despite revenue growth remaining steady at 4.2% y-o-y, Kimly’s  3QFY18 PATMI was negatively impacted. This was due to higher property, plant & equipment (PPE) depreciation costs. 

However, we do expect such costs to continue to increase following the acquisition of Asian Story Corp (ASC), but will likely be offset by the canned drinks manufacturer’s profitability.

Source: RHB Invest Research - 10 Aug 2018