Berli Jucker

Berli Jucker Plc (BJC)
 

As expected: BJC reported a net profit of Bt645m for 1Q12, up by 10% YoY and 18% QoQ. The number was perfectly in line with our estimate.
Results highlights: Sales totaled Bt8.8bn in 1Q12, up by 14% YoY and 7% QoQ on stronger sales of packaging and consumer goods.
The Industrial supply chain reported sales of Bt4.1bn, up by 13% YoY and 4.9% QoQ on better sales of glass packaging and aluminum cans. However, the division’s profit dipped 2% YoY because interest expenses rose with the financing of construction of a new factory in Vietnam.
The Consumer supply chain was the only division that posted YoY profit growth. The division’s sales rose by 20.2% YoY and 6.6% QoQ to Bt2.7bn (on stronger sales among the snacks, tissue and personal care units) and its net profit jumped by 84% YoY and 152% QoQ to Bt211m, driven by fatter product margins (particularly for snacks and tissue paper) and a lower corporate income tax.
The Healthcare supply chain’s sales declined 8% YoY and its net profit fell 30% YoY, due mainly to the postponement of orders by state hospitals to 2Q12.
Outlook: We expect 2Q12 earnings to soften QoQ because of seasonality and due to start-up costs for a new aluminum factory in Vietnam.
What’s changed? Our profit forecast and target price stand unchanged.
Recommendation: We like BJC’s long-term story— building and integrating supply chains and expanding into neighboring countries. However, its current valuation looks full at an FY12 PER of 24.8x and PEG of 1.04x and there isn’t any upside to our DCF-derived YE12 target price. We, thus, maintain our HOLD rating.