, Hong Kong

Asian Citrus' profits to take a 24% dive

Agribusiness isn't going too well.

According to Maybank Kim Eng, AC expects its 1HFY6/13 sales and core net profit to drop YoY, though the magnitude of the decline was not mentioned.

The profit alert did not come as a surprise to the research firm, as it had already announced weak winter crop trading updates owing to unfavorable weather and negative impact brought by its replanting program. 

In all, sales of winter oranges were 15% short of our projections, implying 8%/5% downside risk to our original total orange sales/total sales projections for FY6/13F.

Here's more from Maybank Kim Eng:

1HFY6/13 preview. We forecast a 1HFY6/13 core net profit decline of 24% YoY as a result of an 11% YoY revenue drop. We project a 2.6ppt YoY GPM contraction for the same period given the ASP pressure at both its orange plantation and processed fruit units.

We believe that OPEX ratios will inevitably increase YoY amid weak sales. Note that the ASP of processed fruit concentrates plummeted in 2HFY6/12 as a result of destocking by its Thai and Philippines peers, which led to a tough base in 1HFY6/13.

On a separate note, we expect headline net profit to drop more rapidly than the core net profit given the much lower fair value gains on biological assets to be booked in 1HFY6/13.

Better outlook in 2HFY6/13 though. Despite a weak 1HFY6/13, we reckon there are several positive catalysts for the stock, including: i) prices of tropical juice concentrates have stabilised, rebounding slightly since Nov 2012; ii) the new BPG production plant is expected to commence operations after Chinese New Year, which should boost its processing capacity by 67%; iii) improving domestic consumption could see negotiated ASPs of its summer oranges rise; iv) 2HFY6/13 would have a more favourable comparison base for its processed fruit unit.

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Unemployment rate rises to 5.4% from February to April
The total number of unemployed people stands at 206,100.   The unemployment rate rose by 0.4 percentage points to 5.4%  from February to April, when compared to the January to March period.    Based on the data from the Census & Statistics Department (C&SD), the total number of unemployed people from February to April was 206,100, an increase of 17,600 from the preceding three-month period.   Meanwhile, the number of unemployed rose by around 25,000 to 142,000, translating to a rate of 3.8%.   With the increase in the number of jobless and underemployed individuals, total employment dropped to 3,559,200, whilst the labour force fell to 3,765,300.   The deterioration of Hong Kong’s labour market however should see an improvement in the coming months, according to Secretary for Labour & Welfare, Dr Law Chi-kwong.   The receding local epidemic situation and progressive relaxation of social distancing measures, the new round of Consumption Voucher Scheme, and Other relief measures including the 2022 Employment Support Scheme should help drive improvement in the employment sentiment, said the C&SD.  
Economy