Towards Financial Freedom
NCL - Strong 2Q Results To Ignite Stock
NCL is due to release its 2QFY13 results next Tuesday before market opens. Our S-curve revenue recognition model indicates it will post revenue of MYR300m and a bottomline of MYR40m, up 78% y-o-y, buoyed by robust vessel sales during the quarter. As NCL's 2H tends to be stronger, we see better vessel sales and hefty recognition boosting its 4QFY13 numbers and bringing NCL to a podium finish at year-end. Maintain BUY, with TP SGD0.35.
- 2Q results should reignite confidence in stock. NCL's stock has been trading sideways recently in part due to the fact that its 1QFY13 numbers only met 20%/22% of our and street estimates. Our 2QFY13 forecast will bring the 1H13 tally to MYR76m, at 42%/46% of our/street forecasts, which should put it well on track to deliver strong growth over FY12.
- 2H typically comprises 57%-79% of full-year results. In the last three years, NCL delivered 57%, 79%, and 59% of its full-year net profits in the 2H period. Our model indicates that its performance this year will follow a similar pattern due to the S-curve of revenue recognition on vessels sold.
- Management confident of record vessel sales this year. In its 23 July announcement, NCL said it is "on track to surpass a record high of 21 vessel sales achieved in 2012". We see a combination of a strong 2Q and clear positive guidance prompting the stock's re-rating.
Source: OSK
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