NTPM eyes regional expansion ahead

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KUCHING: NTPM Holdings Bhd (NTPM), Malaysian-based consumer goods and paper company, saw its earnings for the first half of the financial year 2013 (1HFY13) coming within expectations while it looks into expanding its presence regionally in Vietnam.

OSK Research Sdn Bhd (OSK Research) said in a report yesterday, “Revenue increased by 7.1 per cent year-on-year (y-o-y) from RM233.4 million to RM217.9 million while earnings jumped 21 per cent y-o-y from RM18.6 million to RM22.5 million.”

The research team noted that the group’s stellar results were largely buoyed by its strong performance from the personal care and paper products segments.

“The increase in revenue was due to higher turnover from personal care products (an increase of 44.3 per cent y-o-y), supported by stronger baby diapers demand in the domestic market in tandem with the ‘Dragon baby’ boom,” the research team highlighted.

However, it noted that tissue products sales were moderated slightly by 1.6 per cent y-o-y due to weakened export sales.

Meanwhile, the group’s profit before tax expanded by 24.5 per cent on the back of stronger performing personal care (an increase of 28.2 per cent y-o-y) and paper products (an increase of 23.8 per cent y-o-y) segments, the research team cited.

It added, “On a quarter-on-quarter basis, NTPM’s top and bottom lines improved by 3.1 per cent and 20.6 per cent respectively, mainly attributed to higher average selling prices of tissue products as well as favourable pulp and waste paper price.”

NTPM saw an its earnings before interest and tax (EBIT) margin inched up by 2.2 per cent to 14.3 per cent, driven by wider margins from paper products (an increase of 3.1 per cent) as a result of lower raw cost material and higher selling price of tissue products, the research team pointed out.

Meanwhile, NTPM was also looking into expanding its presence in Vietnam. To note, the group had recently allocated a total investment of US$19.1 million to set up a 10 hectare plant in Vietnam.

OSK Research said, “The group’s recent investment in Vietnam is also one of the company’s strategies to target the Indochina markets.”

In addition, the research team noted that the group was also looking into the baby diapers market in Malaysia. The group was expecting to create a wider range of products through the baby diapers market.

As such, OSK Research remained optimistic on NTPM’s expansion plan and financial results and pegged the fair value at RM0.55 per share.