EKSONS - In line; reiterate OUTPERFORM (CIMB)

A rare Japan earthquake beneficiary, Eksons turned in a near doubling of 1QFY3/12 net profit, which was almost double our forecast on an annualised basis. But it is within our expectations as soft prices should lead to weaker plywood earnings over the next few quarters. Eksons did not declare an interim DPS, which was within expectations. We are maintaining our FY12-14 EPS and target price of RM1.87, which is based on a 40% discount to our 12x target P/E for the timber sector. The large discount reflects its small market cap and lack of timber concessions. We continue to rate Eksons an OUTPERFORM as the share price could be catalysed by plywood price recovery by year-end, a sales pick-up for its property project and high 8-9% dividend yields. 53% of Eksons’s share price is supported by its net cash.