Sharelink Securities & Financial Services has upped their net profit forecast for Muskita Aluminium Industries (MAI) from EUR 10.5 mln to EUR 11.6 mln following the above-expected results reported for the first quarter of 2007 and increased their share price target.
Sharelink are projecting total revenue of EUR 68 mln for 2007, supported by signs of positive ongoing construction activity in
EBIT margins are currently estimated at 18.8% from 17.8% before, with the anticipated improvement reflecting the company’s ability to pass on to its clients (mainly in the local market) part of the higher raw materials and energy costs, and its continuous efforts to contain the rate of increase of its cost of sales and of its administrative and selling expenses, at levels below the rate of increase of revenue.
Following the aforementioned changes in earnings estimates, Sharelink have revised the price target on the stock to EUR1.55/share from EUR1.40/share before. At this price the stock would be trading at a 2007F P/E of 11.0x and a 2007F EV/EBITDA multiple of 7.9x. MAI has already proceeded with a dividend payment of EUR0.0345/share (exdividend: 7 March 2007). The BoD of the company has also decided to propose at the AGM on 19 September 2007, an additional dividend payment of EUR0.052/share. It should be noted that the stock’s liquidity is persistently low since the company’s listing, denoting that the shares are closely held. “Hence, we do not expect a material improvement on MAI’s stock liquidity in the near future despite the material improvement in the overall market liquidity since the implementation of the Common Trading Platform between the Cyprus Stock Exchange (CSE) and the Athens Stock Exchange (ASE) on 30 October 2006,†Sharelink analysts said in their report dated may 23, 2007.
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1Q 2007 RESULTS ANALYSIS
The company reported a 14.2% growth in revenue to EUR17.3 mln against projections of EUR17.1 mln. Sharelink estimate that part of the increase in revenue (4-6%) relates to the company’s efforts to increase its prices, and consequently pass on to its clients (mainly in the local market) part of the increased production costs. Sales in the domestic market reported a 7.2% increase to EUR10.1 mln, mainly reflecting the strong ongoing activity in the local construction market. With a domestic market share of around 85%, MAI is the only company in
Gross profit in 1Q 2007 increased to EUR 5.4m from EUR 4.6m in 1Q 2006, with gross margins improving to 31.2% from 30.2% in 1Q 2006. The improvement mainly reflects the company’s successful efforts to contain cost of sales (12.6% y-o-y increase against a 14.2% increase in revenue), as well as, its ability to pass on to its clients (mainly in the local market) part of the increased aluminium and energy costs.
PAT attributable to the shareholders increased by 26.1% to EUR 3.1 mln, against projections of EUR 2.9 mln.
