Aug 2007 Financial News

AGL Releases Nine Months Results

Aug 21, 2007

Results for the Nine Months Ended June 30, 2007

Agostini’s Limited (AGL) for the Nine Months Ended June 30, 2007 reported Earnings Per Share (EPS) of 75 cents, an outstanding increase of 61.24 per cent or 47 cents on the corresponding EPS of FY06. Q307 on Q306, the Company’s EPS was up 68.38 per cent or 8 cents from 12 cents to 20 cents.

NM07 on NM06, Turnover increased from $272.95 million to $339.82 million, up a considerable 24.50 per cent or $66.88 million. Q307 on Q306, this figure was up 16.60 per cent or $14.53 million to $102.05 million. According to the Chairman, AGL’s Business Units in the Trading and Services Divisions delivered strong sales and profit growth with the Agostini Pharmaceutical and Agostini Marketing’s Interiors divisions being the outstanding performers in the third quarter. Additionally, on June 20, 2007 AGL acquired a 51 per cent shareholding in Mobern Lighting, a long established business and customer in the lighting fixtures segment in the North East USA. It is expected that this strategic arrangement will bring substantial future revenue and cost benefits to Agos Lighting.

Operating Profit totalled $30.53 million, up a noteworthy 41.94 per cent or $9.02 million while Q307 on Q306, this figure grew 39.22 per cent or $2.32 million to $8.24 million. Net Finance Costs fell a significant 33.58 per cent or $1.39 million from $4.14 million (NM06) to $2.75 million (NM07).

Profit before Taxation for the nine-month period amounted to $27.78 million, up a commendable 59.93 per cent or $10.41 million from $17.37 million for the same period in FY06. The Effective Tax Rate for the period under review was 26.64 per cent compared to a Tax Rate of 27.12 per cent in NM06. Thus Profit After Taxation rose a substantial 60.98 per cent or $7.72 million to end the period at $20.38 million.

The Chairman has stated that based on these results and barring any unforeseen circumstances, the Company is expected to see significantly improved results in the current financial year.

AGL’s shares are currently trading at a price of $9.85. In light of these commendable results, we are increasing our forecasted EPS to $1.10 for FY07. At the current price and this revised EPS, this share is trading at an attractive price to earnings multiple of 8.95 times, given that this share usually trades in the range of 12 to 14 times. Based on this analysis, we continue to recommend a BUY on this share, however, we do caution investors that this share is tightly held with over 75 per cent held by substantial shareholders. As such, acquiring this share may be difficult.

Nancy Chen
WISE Equity Research Team