Aug 2007 Financial News

NML Releases Nine Months Results

Aug 07, 2007

Results for the Nine Months Ended June 30, 2007

For the Nine Months Ended June 30, 2007, Neal & Massy Holdings Limited (NML) reported Earnings Per Share (EPS) of $2.74, which was up on the corresponding nine-month period in 2006 by a substantial 32.37 per cent or $0.67. Q307 on Q306, the Group’s EPS grew 32.39 per cent or $0.23 from $0.71 to $0.94.

Group Third Party Revenue, for the period under review, totalled $3.69 billion, up 22.41 per cent or $675.59 million when compared to the same period in FY06. Operating Profit rose a significant 25.28 per cent or $64.28 million to $318.58 million while Share of Results of Associated Companies grew an outstanding 121.53 per cent or $24.09 million to end the period at $43.91 million.

Profit Before Taxation for the nine-month period increased a considerable 32.24 per cent or $88.37 million to $362.49 million. The Effective Tax Rate for the nine months ended June 30, 2007 was 27.40 per cent compared to a Tax Rate of 28.50 per cent for the same period in FY06. Thus, Profit After Taxation was up a significant 34.27 per cent or $67.17 million from $196 million (NM06) to $263.16 million (NM07).

At an Extraordinary General Meeting on June 25, 2007, shareholders of NML voted in favour of the proposed merger with The Barbados Shipping & Trading Company Limited (BS&T). Subsequently, two Shareholders of BS&T filed injunctions in the Barbados Court preventing the meeting of BS&T Shareholders from taking place. Furthermore, Ansa McAl Limited (AMCL) has made an unsolicited bid for the shares of BS&T at a price of BD7.00 per share. At this time, the Board of Directors is giving serious consideration to these latest developments.

The Chairman has stated that the Group expects to see a significant improvement in performance over the previous year. In light of these results and the forward looking statements of the Chairman, we have increased our forecasted EPS for FY07 to $4.30. At the current NML share price of $45.50 and this forecasted EPS, this share has a price to earnings multiple of 10.58 times. Additionally using a multiple of 13 times and the forecasted EPS of $4.30, this share has an expected return of approximately 23 per cent on the current price or a target price of approximately $56.00. Thus we continue to recommend a BUY on this share.

Nancy Chen
WISE Equity Research Team