Total revenue decline by 8% q-o-q to US$139.6mn due to lower sales volume of 1.6mn tons (-21% q-o-q) amid better ASP (+17% q-o-q). We expect production in coming quarters to pick up to achieve the full-year target of 10mn tons.
Production cost dropped by 11% q-o-q due to lower production volume (-13% q-o-q) despite a slight increase in production cash cost (+3% q-o-q).
SAR balance sheet remains firm with total cash balance of US$183mn and net gearing ratio of 26%.
Generally the 1Q09 results is inline with our expectations, hence we are maintaining our view that SAR profit in FY09 will still be growing as a result of higher sales volume and ASP. We expect sales volume to reach 10mn tons with an ASP of US$78/ton for FY09.
We are maintaining our forecast for SAR, however, we raised our TP to S$1.55 as we have lowered our WACC to 11.4% due to lower risk premium assumption. Hence, we reiterate our BUY recommendation on the counter.
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