Feb 2007 Financial News

Agostini's Releases First Quarter Results

Feb 22, 2007

Results for the Three Months Ended December 31, 2006.

Agostini’s Limited reported an increase in Earnings Per Share (EPS) of 33.33 per cent to 28 cents (Q1-FY05) compared to 21 cents for Q1-FY06. The improvement in EPS was as a result of robust sales growth in its Business Units in the Trading and Service Divisions.

Turnover rose 32.61 per cent to $126.555 million with the Trading Services contributing 58.30 per cent. Profit Before Tax was up 33.69 per cent to $10.516 million while the Effective Tax Rate rose from 26.60 per cent to 27.21 per cent. Ultimately, Profit After Tax increased 32.58 per cent to $7.655 million.

Despite improvements in production efficiency at Agos Lighting, export sales were disappointing due to a lack in US customers’ confidence in the punctuality of deliveries. This was based on production difficulties during the previous year.

The Housing Division also performed below expectations due to bad weather and site conditions at the Debe Housing Project which adversely affected construction activity. The Company realized a net profit of $1.6 million from the sale of two parcels of land at Coblentz Cascade in the current quarter. The board decided to sell the land as the approval obtained from Town and Country Planning for its intended condominium development was for fewer units than expected.

At the current price of $9.45 and the forecasted EPS of 90 cents, Agostini’s is trading at a price/earnings ratio of 10.5 times. Given that this share usually trades between 14 to 16 times earnings, we continue to recommend a BUY.

Sreshtha Tewari
WISE Research Team
Thursday, February 22, 2007.