May 2007 Financial News

PLIPDECO Releases First Quarter Results

May 14, 2007

Results for First Quarter Ended March 31, 2007

For the First Quarter Ended March 31, 2007, Point Lisas Industrial Port Development Corporation Limited (PLIPDECO) reported Earnings Per Share (EPS) of $1.10. While this represents an outstanding increase of 478.95 per cent or $0.91 on the comparable EPS of FY06, it is important to note that $0.85 of the $1.10 came from Unrealized Fair Value Gains. Thus, if we exclude these gains, the EPS would be up by 31.58 per cent or $0.06, which is still significant growth for the Company.

Turnover for the period also showed considerable growth, up by a healthy 29.99 per cent from $47.06 million in Q106 to $61.18 million in Q107. The increase was attributed to an increase in estate revenue and port revenue due to higher throughput and a new port tariff that was implemented in April 2006. As mentioned previously, the Company had Unrealized Fair Value Gains, with this figure amounting to $33.53 million for the period under review compared to $3.40 million in the corresponding period for FY06. The increase in fair value gains relates to the valuation of investment properties in accordance with International Accounting Standard (IAS) 40. Thus, Operating Profit ended the quarter at $53.07 million, up by a considerable 328.90 per cent or $40.70 million.

Net Investment Income stood at $2.00 million and was the only figure to decline, falling 18.00 per cent from $2.44 million in the comparable quarter of FY06. Finance Costs grew by 16.04 per cent from $6.42 million in Q106 to $7.45 million in Q107. As such, Profit Before Taxation amounted to $47.62 million, up by a considerable 467.27 per cent or $39.23 million.

The Effective Tax Rate for Q107 was 8.17 per cent compared to a Tax Rate of 12.48 per cent for Q106. As a result, Profit After Taxation ended the quarter at $43.73 million, an increase of $36.39 million or 495.24 per cent on the corresponding period of FY06.

The shares of PLIPDECO are currently trading at a price of $7.25. In light of the improved results, we are revising our forecasted EPS to $4.10, which is ten per cent up on the last audited EPS. At this forecast and the current price, this share is trading at an extremely low multiple of 1.77 times. However, it should be noted that a significant amount of the profit of this Company results from unrealized gains. Nevertheless, PLIPDECO has traditionally traded in the band of 9 to 17 times, which gives plenty room for growth from the 1.77 multiple. Thus, based on these fundamentals and expected improved performance of the Company for 2007, we recommend a BUY at this time.

Gia Singh
WISE Equity Research Team