Power Root’s FY19 earnings to come in within expectations

Power Root Bhd’s ( Power Root) financial year 2019 ( FY19) earnings has been anticipated by the research arm of Kenanga Investment Bank Bhd’s ( Kenanga Research to come within its and consensus expectations, at circa RM29 million to RM33 million.

Kenanga Research’s and consensus’ full-year estimates for Power Root were RM30.9 million and RM30.5 million, repsectively.

“In the upcoming fourth quarter of 2019 (4Q19) results, we anticipate core profits to amount at RM7 million to RM12 million, from RM6.5 million in 3Q19,” the research arm projected.

“Earnings expansion could be translated from the materialisation of the group’s rationalisation of its distributor and client profile, but could bring about impairments or provisions, better commodities (mainly coffee) prices and cost savings from various operational streamlining exercises.”

The research arm noted that 4Q18 core results registered at RM0.4 million, as the period was bogged by poor sales environment and highly suppressed margins.

“On a full-year FY19 basis, this would translate to core net earnings to range between RM29 million to RM33 million, up 23 per cent to 40 per cent year on year (y- o-y).

“This is within our and consensus full-year estimates of RM30.9 million and RM30.5 million (up 32 per cent y- o-y), respectively.”

However, Kenanga Research anticipated sales could come off at RM357.1 million (down 16 per cent) owing to the above.

With a 5.1 sen dividend paid year to date ( YTD), the research arm also anticipated a lumpier 4Q19 payment to arrive close to its FY19E’s 7.5 sen expectation, slightly below a 100 per cent payout. SHORT-TERM interbank rates remained stable on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system.

The surplus in the conventional system was reduced to RM22.43 billion from RM29.37 billion yesterday morning, while in the Islamic system, it eased to RM12.7 billion from RM13.51 billion.

Earlier, BNM issued one range maturity auction money market tender, one Qard- Islamic Range Maturity ( iRMA) tender and one reverse repo tender.

At 4 pm, the central bank conducted a RM22.4 billion conventional money market tender and a RM11.7 billion Murabahah money market tender, both for one-day money.

BNM also revised the conventional overnight tender to RM11.7 billion from RM8.5 billion.