FY21 results came in below
Maintain BUY and MYR4.00 TP
FY21 results came in below ours/ consensus’ estimates, due to underperformance (softer vehicle sales) at its 38%-owned Perodua (P2) ops in 4Q21. The financial setback in FY21 (-45% YoY) is well-flagged. Focus is on the consumer recovery play (higher sales volume, stronger product pipeline) in FY22. Our TP is unchanged, pegged to 16x FY22 PER (-0.5-SD valuation).
Salient 4Q21 results
Headline net profit of MYR240m in 4Q21 consisted of substantial one-offs (MYR109m), mainly from the tax credit from the tax incentives for its new plant (+MYR103m). Excluding that, UMW reported core net profit of MYR131m in 4Q21 (3Q21: -MYR48m). This took its FY21 core earnings to MYR156m (-45% YoY); 91% of our FY estimate. P2’s weaker-than-expected vehicle sales were the key underlying setback. It reported lower vehicle sales of 71.2k/ 190.3k units in 4Q21/ FY21 (vs. its earlier goals of 81k/ 200k units). This was partly offset by better-than-expected performance at its Toyota ops. Toyota sold 72.4k units in FY21, surpassing its 72k units target. UMW declared final DPS of 5.8 sen in 4Q21 (4Q20: 4.0 sen).
A better FY22
Our estimates are unchanged, on an improved FY22. We expect UMW to register higher vehicles sales (P2: +22% YoY to 233k units; Toyota: +2% YoY to 74k units) in FY22 as the economy progressively recovers post-pandemic. Our sales forecasts are comparatively: (i) lower vis-à-vis P2 (247.8k units) but (ii) higher vs. Toyota’s 73k units. UMW is ready to ride on the EV plays, with: (i) plans to roll out 2 new EVs (BEV & hybrid; exCross hybrid) in FY22-23 and (ii) EVs making up 15% of its FY22 sales.
Big picture aspiration; ESG progress
All in, UMW has set a 10-year target, to achieve: (i) MYR20b revenue, (ii) MYR2b pretax profit and (iii) MYR1b net profit. This would be aided by organic growth, M&As and divestment strategies. On the ESG front, it targets to be carbon neutral by 2050, with a 300k trees planting target