KUALA LUMPUR: NTPM Holdings Bhd's net profit of RM5.3 million in the first half (1H) of FY23, which declined 60 per cent year-on-year (YoY), came below CGS-CIMB Research's expectations.
The firm said the results made up 33 per cent and 35 per cent of CGS-CIMB Research and Bloomberg consensus full-year forecasts due mainly to higher operating costs.
NTPM's 1H FY23 revenue rose 23 per cent YoY because of higher average selling prices (ASPs) and higher sales volumes for both the tissue and personal care segments.
"However, it failed to offset the impact of higher raw material costs for both pulp and wastepaper, higher freight costs, as well as a weaker ringgit versus the US dollar, leading to a sharp gross earnings margin contraction of 4.6 per cent to 8.9 per cent," it said in a note today.
CGS-CIMB Research expects NTPM to book sequentially higher profits, potentially leading to a net profit in the third quarter (Q3) of FY24, as the company is likely to mainly benefit from tapering in its input costs for pulp, wastepaper, and freight, and a stronger ringgit.
"Nevertheless, we cut our FY23-FY25 earnings per share (EPS) forecasts by 9.6-28.3 per cent to reflect higher operating costs, mainly for gas and electricity," it added.
CGS-CIMB Research has maintained its 'Hold' call on NTPM, with an unchanged target price of 42.1 sen.
"Upside and downside risks include lower or higher pulp, wastepaper prices, and freight costs, stronger or slower growth in export markets, and a stronger or weaker ringgit versus the US dollar," it said.