Update On NTPM Holdings

Posted previously. Stock Review: NTPM Holdings

NTPM reported it's earnings early this month.

As can be seen from the above table, year-year comparison numbers were impressive and this was highlighted on the Edge Financial Daily.

• NTPM 1Q net profit up 37% to RM14m
  Written by Financial Daily
  Friday, 04 September 2009 11:49
  
  KUALA LUMPUR: Tissue and sanitary paper products maker NTPM HOLDINGS BHD []’s net profit surged 37.04% to RM14.06 million in its first quarter ended July 31, 2009, from a year earlier, as revenue grew 8.26% to RM94.49 million.
  
  In a statement to Bursa Malaysia yesterday, the company said the increase in revenue was contributed by the continued growth in sales of tissue products, sanitary napkins and baby diapers. Earnings per share rose to 1.30 sen from 0.9 sen. It did not declare any dividend.
  
  In a separate statement, it said its subsidiary, Nibong Tebal Paper Mill Sdn Bhd had entered into a conditional share sale agreement (SSA) to dispose of 360,000 shares of RM1 each, representing a 60% stake in its unit Jia In Sdn Bhd to Loo Hooi Hock and Tan Sin Wui for RM541,492.
  
  It said Loo and Tan were both directors of Jia In, although it did not give a reason for the disposal. NPTM also said its cost of investment in Jia In had been RM714,320.
  
  This article appeared in The Edge Financial Daily, September 4, 2009.

However, as solid as it was, it's best to note that on a quarter-to-quarter comparison, the earnings were rather flat.

This is the link to its previous earnings reported in June 2009. Quarterly rpt on consolidated results for the financial period ended 30/4/2009

In OSK review of NTPM's earnings there was an interesting point highlighted.

• Venturing into stationery business. To recap, NTPM is venturing into the recycling of paper waste to stationery and compressed fibreboard. The group has acquired 4 fibreboard-making machines which are capable of producing 30 tonnes of compressed fibreboards per day and 8 machines for the production of envelopes. While the total capex for the new venture is minimal at RM2m-RM3m, the margins for this business are substantial given that the raw material for these products are sourced internally or externally at a relatively low cost. Also, given that the group will be making the products from scratch, NTPM would have a competitive edge as it can mark its products lower than the market price without eroding margins. Nonetheless, the stationery industry is highly competitive, which is a hurdle to NTPM’s expansion in this business.

Yesterday OSK made another report.

• On clarification with the management, we note that the higher 1QFY10 revenue and earnings were mainly driven by: (i) higher selling prices, and (ii) lower pulp prices. However, as pulp prices have been rising since March, we believe the increase is likely to be reflected in the company’s 3Q numbers. To err on the side of conservatism, we have adjusted downwards our FY10 and FY11 earnings forecasts by 3% to 15% after factoring in higher capex and pulp prices assumptions. Despite the 13% downside compared with our TP of RM0.50, we maintain a NEUTRAL recommendation on the stock as we believe that the decent dividend yield of ~5% would mitigate the downside risk.

An issue to consider if you are a long term investor?