KUCHING: Despite Sasbadi Holdings Bhd’s (Sasbadi) first quarter (1Q) earnings only accounting for nine per cent of analysts’ full year earnings, it was deemed within expectations since 1Q of financial year 2015 (1QFY15) is a seasonally weak quarter for the group.
In a statement on Bursa Malaysia, Sasbadi noted that the group’s profit before tax (PBT) for the current quarter increased by RM0.394 million or 20.8 per cent to RM2.286 million compared to RM1.892 million in the immediate preceding quarter.
For FY15, AllianceDBS Research Sdn Bhd (AllianceDBS Research) noted that 2Q (December to February) is expected to post the highest quarterly sales, followed by 3Q (March to May).
It further noted that the group has declared three sen interim dividend, which represents over 200 per cent payout from its reported 1QFY15 earnings per share (EPS) of 1.3sen.
“We understand that the higher than expected dividend payout is to partly compensate shareholders for no dividends in the last financial year.
“We believe that the strong dividend payout also implies management’s optimism of its earnings prospects going forward,” it said.
For now, AllianceDBS Research is maintaining its 50 per cent payout assumption for FY15, which implies an attractive dividend yield of 4.8 per cent.
The research house kept its earnings unchanged pending a meeting with the management for an update post results.
All in, AllianceDBS Research reiterated its ‘buy’ rating on Sasbadi, based on a discount cash flow-derived target price of RM2.25 per share.
The research house noted that the stock is trading at an undemanding valuation (10.4-fold/8.2-fold/6.7-fold of FY15-FY17 EPS).
“Yield is decent at 4.8 per cent for FY15,” it added.