Rojana Industrial Park

Rojana Industrial Park Plc (ROJNA)

Deeper loss than estimated: ROJNA posted a net loss of Bt1.25bn for 4Q11 and a net loss of Bt838m for FY11. The 4Q11 loss was deeper than our estimate because—apart from losses related to the flooding of Bt966m—the firm booked a divestment loss of Bt553m in the quarter.
Results highlights: Revenue slumped by 89% YoY and 83% QoQ to only Bt308m, primarily due to a sharp drop in land transference and utility income as a result of the flooding. Only 10 rai of land was transferred during the quarter.
In 4Q11, ROJNA entered into an agreement to sell a wholly-owned subsidiary, Rojana Distillery (a non-core business), to an unrelated company for Bt400m. The transaction was executed on Feb 3, 2012. As a result, ROJNA booked a Bt410m investment impairment and Bt143m in provisions for doubtful debts owed by the distillery to the erstwhile parent company.
Outlook: Weak numbers will persist into 1Q12—the power plant will remain shuttered until some time in mid 2012—but a shallower is expected. We anticipate that all operations will normalize by 4Q12.
What’s changed? Our forecast and target price stand unchanged.
Recommendation: The performance has already bottomed out and a recovery is in progress. ROJNA currently trades at PERs of 15.6x for FY12 and 11.1x for FY13, which we believe are justifiable multiples. As such, we have upgraded our recommendation to HOLD from SELL.
========