Net profit plunge looks scary. Doubt the stock price will be able to hold above 40 cents over the next few weeks/months, even though CIMB (below) is less pessimistic than me:
Excluding S$1.4m forex and impairment losses, Broadway's 2Q core earnings were 3% below our estimate and 19% below consensus because higher-than-expected sales were offset by higher opex and effective tax rate. 1H net profit accounted for 42% of our full-year forecast and 35% of consensus.
We adjust FY11-13 EPS by -4% to +1% for this set of results, higher sales and lower GP margin. But we retain our target of S$0.47, still based on its 5-year historical P/BV average of 0.8x. We maintain our NEUTRAL call given the support from its decent dividend yields and low valuations.
