Regal International kept at ‘overweight’ on better than expected results

SINGAPORE (June 19): NRA Capital is keeping its “overweight” call on Regal International with a fair value of 3 cents as the group’s 1Q17 results turned out to be better than expected.

In a Monday report, analyst Liu Jinshu said, “While 1Q17 revenue was equivalent to about 22.5% of our prior forecast, PATMI grew to RM1.77 million ($0.57 million) or 70.8% of our full-year forecast. The improved profitability came about as gross margin grew to 31.5% in 1Q17 from 26.8% in 2016.”

Although Liu deemed the group’s 4Q16 gross margin of 46.4% as excessive, the fact that Regal managed to maintain gross margin at more than 30% over two consecutive quarters is “impressive”.

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