Nov 2006 Financial News

PLIPDECO Releases Nine Months Results

Nov 29, 2006

For the Nine Months ended September 30, 2006 PLIPDECO (PLD) reported Earnings Per Share (EPS) of $0.45, which represents a significant fall of $0.54 or 54.55 per cent on the comparative EPS in 2005. This was largely due to: a considerable fall in Fair Value Gains and a significant increase in the tax charge.

Nine Months on Nine Months, Fair Value Gains which relates to the valuation of investment properties fell by 54.71 per cent or $8.22 million to $6.81 million. This is in accordance with IAS 40; additionally the Chairman has stated that he expects the current valuation to remain flat to year end 2006. While the Company’s Taxation moved from a credit of $3.27 million in 2005 to a charge of $3.57 million in 2006. This change was due to the Company benefiting from a reduction in the Corporate Tax Rate from 30 per cent to 25 per cent in 2005.

Turnover for the period under review amounted to $151.57 million and was up by a marginal 4.50 per cent over 2005, in comparison to Investment Income which was up by a significant 44.40 per cent to end at $4.91 million. However, for the three months ended September 30, 2006 Turnover amounted to $53.72 million and was up by 18.64 per cent on the same period in 2005, while Investment Income for Q3 2006 was down by 91.91 per cent or $1.09 million on Q3 2005.

Operating Profit for the Nine Months stood at $35.08 million and was down by 26.55 per cent when compared to the same period last year. A considerable increase in Finance Costs was also responsible for the decline in overall profits as this figure moved from $15.03 million to $18.52 million, an increase of 23.18 per cent. The Chairman has attributed the increase in this cost to major projects, which included the development of a 4.5 hectare container yard completed in June 2006 and the ongoing implementation of the Navis Terminal Operating System. Nine Months on Nine Months, Profit Before Taxation fell by a considerable 40.57 per cent to $21.47 million.

The Effective Tax Rate for the period under review was 16.65 per cent compared to a Tax credit of 9.04 per cent for the same period in 2005. Thus, Profit After Taxation for the Nine Months stood at $17.90 million, down by 54.57 per cent or $39.39 million on the corresponding period in 2005.

The Chairman has stated that the Board is working with management to strengthen the performance of the Company and changes are already underway in this regard. However, he has also noted that these efforts are not expected to significantly improve the performance of PLIPDECO for the rest of this year.

The shares of PLIPDECO are currently trading at a price of $6.94. In light of the current results and the expectations for the next quarter, we are revising our Forecasted EPS downwards to $0.55. At the current price and the revised Forecasted EPS, the shares of PLD are trading at a P/E multiple of 12.62 times. This multiple is significantly higher than the band in which this share usually trades of 5 to 9 times. Thus, given these fundamentals, we recommend a SELL on this share.


Gia Singh
WISE Research Team