Aug 2007 Financial News

PLIPDECO Releases Half Year Results

Aug 16, 2007

Results for the Half Year Ended June 30, 2007

For the Half Year Ended June 30, 2007, Point Lisas Industrial Port Development Corporation Limited (PLIPDECO) reported Earnings Per Share (EPS) of $1.18, up an outstanding 237.14 per cent or 83 cents on the corresponding EPS in HY06. However, while the increase is significant, it is important to note that 91 cents of the $1.18 came from Unrealized Fair Value Gains. If we exclude the unrealized gains, the EPS from core earnings would be up 50 per cent or 9 cents, which is still significant growth for PLIPDECO.

Turnover for the Half Year period amounted to $116.61 million, up a considerable 19.18 per cent or $18.77 million on the same period in FY06. Q207 on Q206, this figure was up 9.16 per cent from $50.78 million to $55.44 million. The Chairman has attributed the improvement in Turnover to an increase in estate and port revenue. Unrealized Fair Value Gains for the period under review stood at $35.91 million, up a significant 428.09 per cent or $29.11 million on the same period in FY06. However, Q207 on Q206, Unrealized Fair Value Gains was actually down 29.96 per cent or $1.02 million, from $3.40 million to $2.38 million. Thus, Operating Profit ended the Half Year at $60.59 million, up by a considerable 132.65 per cent or $34.55 million.

For HY07 Net Investment Income totaled $4.08 million, down 15.32 per cent or $0.74 million from $4.81 million in HY06. Finance Costs ended at $13.70 million for HY07 compared to $13.98 million in HY06, a marginal fall of 2.02 per cent. As such, Profit Before Taxation amounted to $50.97 million, up a substantial 202.05 per cent or $34.09 million.

The Effective Tax Rate for the period under review was 7.91 per cent compared to a Tax Rate of 15.89 per cent for the corresponding period in the last financial year. Thus, Profit After Taxation for HY07 was $46.93 million, up 230.71 per cent or $32.74 million on the comparable period in FY06.

The Chairman has stated that Investors should note that the Company is entering another investment cycle in its port operations. This will see increased demand for cash in the short term and further work must also be done to improve the quality of the relationship with the recognized union at PLIPDECO. Additionally, major projects are currently underway, from which the Company expects to see a further increase in productivity thereby improving future returns based on higher efficiency and overall quality of service in port operations.

The Directors have recommended an Interim Dividend of 10 cents (2006- 10 cents) to be paid on September 21, 2007 to all shareholders on record as at August 24, 2007.

The shares of PLIPDECO are currently trading at a price of $8.00. We are maintaining our forecasted EPS of $4.10 for FY07. At this forecast and the current price, this share is trading at an extremely low multiple of 1.95 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 1.95 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