Towards Financial Freedom
Armstrong - Forex losses drag down earnings
Armstrong reported 4QFY12 net profit of SGD3.5m (+32.9% y-o-y) on the back of revenue of SGD52.1m (+5.9% y-o-y). FY12 core earnings of SGD6.4m (-39.0% y-o-y) were in line with our estimates as the group's hard disk drives (HDD) business as well as consumer electronics performed poorly in line with the industry. The SGD0.6¢/share final dividends came as a disappointment as we expected the group to give out more in view of its net cash balance of 2.4 S¢/share. Maintain NEUTRAL. We will be adjusting our earnings forecast, and reviewing our TP after the analyst briefing later in the morning.
Forex losses in 4Q. Full year FY12's headline PATMI of SGD11.5m came in slightly below our expectation as the exceptional gains occurred in earlier quarters are offset by the derivative forex contract loss of SGD2.4m in 4Q.
HDD and consumer electronic business declined. Sales of HDD declined 10% y-o-y to SGD43.1m as a result of industry weakness, in line with its peers. On the other hand, sales of consumer electronics business also fell by 2.4% y-o-y due to weak global demand. The HDD business and consumer electronic business accounted for 19.9% and 29.9% of the group's FY12 revenue respectively.
Automotive business continued to grow. Despite the tensions between China and Japan in 4QFY12, Armstrong's automotive business, which is the group largest revenue contributor (39.2% of FY12 revenue), continued to grow by 12.4% y-o-y to SGD84.7m y-o-y, driven by the strong demand in Thailand as well as China. This was due to European car vendors benefiting at the expense of Japanese car makers.
Source: OSK
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