Wednesday 28 August 2013

IHH: profit up 60% or profit down 60%? (2)

I did a quick check how the quarterly results of IHH were reported by the press.

The good:

The bad:
In both these cases even the heading was simply plain wrong.

The Market:

Both in Malaysia and Singapore the IHH share was today down more than 5%, much worse than the overall market. In other words, investors sentiment was clearly negative, not in line with IHH's positive press release.

Although profit of a one-off sale last year is a reasonable argument for the fact that the PAT was much lower, what IHH did not mention in its press release was that it raised billions during the IPO (July 2012), which it could freely allocate and over which it was supposed to make a good return.

In its defence the company could bring forward that no company is mentioning that, which is basically true, although disappointing.

The half year net profit was RM 347m, on Equity of RM 19.7 Billion and Liabilities of RM 7.1 Billion that is actually a pretty disappointing result. Return on equity on a full year basis would only be about 3.5%.

The more surprising that the share is trading at such a high valuation, on a first half EPS of only RM 0.04, on a share price of RM 3.84, annualised that means a sky-high PE of about 48.

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