NCB (TP RM4.30– BUY) Company Update: 2Q Volume Surges to New High
NCB saw its container handling volume reach a record high of 883k TEUs (q-o-q: 13%, y-o-y: 30% and YTD: 28%) in 2QFY10, underpinned by strong demand for trade shipments of laden containers amid continued re-stocking activities in most regions to date. While we expect growth to moderate in 2H, we had under-estimated in our volume assumptions for the full year given the strong 1H. As such, this effectively shores up our earnings estimates for FY10, FY11 and FY12 by 7%, 6% and 5% respectively. We have also rolled over our PE valuation of 11x to reflect FY11 earnings, to derive a TP of RM4.30 (from RM3.72), with our BUY call maintained. NCB’s attraction lies in its FY10 gross dividend yield of 8.5%.