Straits Asia Resources 2Q09 results highlights

Thursday, August 6, 2009

1. Good operational results. Revenue exceeded our expectations at US$175.6m (+8.6% YoY, +25.7% QoQ). Gross profit came in at US$81.0m (+25.9% YoY, +22.4% QoQ). Gross profit margin grew by 6.4ppt to 46.1% thanks to higher selling prices and lower fuel costs.

2. Net profit tainted by non-cash charge.Earnings came in below expectations at US$21.4m (-43.3% YoY, -39.6% QoQ) due mainly to a US$14.3m non-cash charge from warrant expenses. Excluding this, net profit would have met our estimates at US$35.8m (-5.4% YoY, +0.8% QoQ).

3. Outlook positive. The group is on track to deliver record earnings in FY09. It is confident of meeting its 9mt production target. Management remains positive on its outlook, citing recovering energy demand.

4. Good dividends, undemanding valuations.SAR has declared an interim dividend of 1.14 US cents, in line with its 60% payout policy. SAR trades at an undemanding 9.8x FY09F PER coupled with a relatively good 4.1% dividend yield.

5. Risks. Key risks to note are a deterioration of global energy markets and refinancing risk. SAR faces a repayment schedule of US$94m in 2009 and US$125m in 2010. It is in the midst of negotiations to refinance the loan.


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Borsa said...
August 11, 2009 at 12:31 AM
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