NTPM records steady 3QFY16, expected to reap benefits from Vietnam investment
KUCHING: NTPM Holdings Bhd (NTPM) has recorded a steady third quarter of financial year 2016 (3QFY16), the research arm of Public Investment Bank Bhd (PublicInvest Research) says, adding that it expects to see the group reap benefits from the Vietnam investment.
In a filing on Bursa Malaysia, NTPM noted that group revenue for the period ended January 31, 2016 was RM457.1 million compared with RM412.7 million for the period ended January 31, 2015, an increase of 10.8 per cent.
NTPM further noted that the group’s profit before taxation for the period ended January 31, 2016 was RM65.4 million, an increase of 60 per cent over the RM40.9 million registered in the previous financial period ended January 31, 2015.
According to PublicInvest Research, NTPM’s 9MFY16 revenue was 79 per cent of its FY16 forecasts.
Moving forward, the research arm expects to see NTPM reaping benefits from the group’s Vietnam investment, as income stream becomes more significant in the long term.
PublicInvest Research noted that NTPM’s focus is to protect the group’s local tissue market (more than 50 per cent market share) while growing its Vietnam operations.
The research arm pointed out that on average, Vietnam’s individual consumption is circa 0.7 kilograms per year ( kg/year), which is still very low and not comparable to Malaysia’s average individual consumption of circa 4kg/year.
“This also implies the growth potential in the Vietnam market,” it said.
However, NTPM’s expansion into Vietnam is not likely to be earnings accretive in the near term and PublicInvest Research expects it to breakeven by its third year in FY18.
The research arm added that NTPM is also looking into developing new products such as the wet tissue which was introduced in May 2015.
Overall, PublicInvest Research revised its earnings estimates upwards by 27- 30 per cent for FY16F18F, as the research arm accounted for stronger quarterly sales due to higher volume as well as margin expansion.