Selamat Sempurna Within Expectations
SMSM’s FY12 net profit of IDR233bn (+69% q-o-q, +16% y-o-y) was in line with our forecast of IDR232bn owing to a seasonally stronger 4Q12 and better-than-expected margins. We maintain our NEUTRAL call and TP at IDR2,475 (13.2x FY13 PE). The counter is currently trading at a 14.1x FY13 PE.
The Hydraxle effect
Selamat Sempurna (SMSM)’s consolidated FY12 revenue jumped 20% y-o-y to IDR2.2trn from IDR1.8trn in FY11. Most of the growth was attributed to revenue from its dump truck and hoist business, which came in at IDR293bn due to consolidation of Hydraxle, which led to an organic top-line growth of IDR63bn (+3% y-o-y). This came mostly from the domestic market, where revenue increased by IDR43bn, and surprisingly, Europe, from which revenue was higher by IDR26bn.
The company’s filter sales edged up 4% but radiator sales dipped 4%. Meanwhile, sales of other products like fuel tanks, brakes and mufflers surged by a strong 54%, which may be an indication that the company is benefiting from its growing domestic automotive capacity. SMSM’s products are mainly for original equipment manufacturers. Volume-wise, however, filter sales flattened while radiator sales slipped 10%, while sales of its other products increased by 38% on average.
Another margin surprise
Although the group’s sales only reached 91% of our target owing to lower organic growth, its overall blended margin was cause for cheer, as gross margin came in at 25.3% compared with our forecast for 23.6%. Our initial forecast was based on expectations of a decline in blended gross margin (last year’s gross margin was 25.5%) as Hydraxle was fetching gross margins that were lower than the holding company’s. The group’s net profit margin stood at 10.8%, wider than our forecast for 9.8%.
All priced in
We like SMSM as a dividend play, providing a 6.1% dividend yield based on its FY13F earnings. However, we are keeping our forecast and NEUTRAL call since the counter is already trading at a 14.1x FY13 PE, close to our unaltered DCF-based IDR2,475 FV, which reflects a 13.2x FY13 PE.
