On YoY basis:
Hexindo’s 1Q results look strong on YoY basis, albeit low base. Revenue and net profit came in at US$124m and US$9.2m, +132% and 109%, respectively.
On QoQ basis:
Top line looks strong with overall revenue grew by 12%, reflecting strong equipment sales. Commission from large equipment sales doubled to US$20m, while small equipment sales grew by 10%. Revenue from after business segment declined by 7%, but this is after a strong 35% QoQ growth last quarter.
But… Bottom line looks weak with net profit declined by 22% QoQ. This is mainly due to deteriorating heavy equipment gross margin to 11% from 15% on the previous quarter.
No official answer on deteriorating in margin at this point. But, the management should be able to elaborate more on the analyst briefing to be held on Thursday.
The company currently trades at 12.1x 2011 PER after a 10% rally in share price yesterday vs. United Tractors at 14.1x 2011 PER.
We are reviewing our forecast and valuations
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