Kingboard Laminates shares rise on market-beating earnings results

PUBLISHED : Saturday, 09 March, 2013, 12:00am
UPDATED : Saturday, 09 March, 2013, 5:15am

Shares of Kingboard Laminates rose 5.98 per cent yesterday to close at HK$3.90 after the company reported earnings that beat analysts' expectations.

Analysts said the big jump also was attributed to the improving performance of the company in the past two months.

"With the expected increase in volume, gross profit margins may recover in the first half of this year. Growth is expected in 2013 and valuations still look reasonable at current levels," said Jonathan Ng, the head of research at CIMB.

Kingboard said gross profit dropped 15 per cent last year to HK$1.92 billion as turnover shrank 5 per cent to HK$12.48 billion.

Net profit fell 12 per cent to HK$1.16 billion. Earnings per share were 38.8 HK cents, against 44.2 HK cents in previously.

Kingboard said copper prices fell from the previous year, which caused a decline in the average selling price of laminates.

The company's shipment volume and capacity utilisation improved during the year, but production capacity was still not fully utilised.

Despite the decline in gross profit, Kingboard said it was experiencing good growth in the mainland market, with sales there accounting for about 50 per cent of total revenue.

The company proposed a final dividend of 12 HK cents per share, representing a payout ratio of 44 per cent, compared with the previous year's 34 per cent after a final dividend of 5 HK cents a share.

"The higher payout ratio is due to its relatively low net gearing and limited [capital expenditure this year]. Also, this will help to give more cash to parent company Kingboard Chemical," Ng said.

Net gearing was 16 per cent.