Emperador - UOB Kay Hian 2024-09-27: Weak 2Q24 Results As Demand Falls; Downgrade To SELL

Emperador - Weak 2Q24 Results As Demand Falls; Downgrade To SELL

Published:
Emperador (SGX:EMI) | SGinvestors.ioEmperador (SGX:EMI)
  • As there are no near-term catalysts and ongoing headwinds, we think that Emperador is overvalued at the current valuation levels. We downgrade Emperador to SELL.

Weak results, below expectations.

  • - Read this at SGinvestors.io -
  • The soft top-and bottom line results were largely due to lower sales volumes for both the brandy and Scotch whisky segments along with increased operating and brand investment costs. As a result, 1H24 EBITDA and PATMI margins fell by 1.2ppt and 1.9ppt y-o-y respectively.

Soft quarter.

  • - Read this at SGinvestors.io -
  • Management expects demand to pick up during the seasonally stronger 2H24.

Brandy: Underperformance as margins fell.

  • 1H24 segmental revenue (-10.3% y-o-y) and PATMI (-11.5% y-o-y) were below our expectations, forming 41.4% and 33.8% of our full-year forecasts respectively. The underperformance was largely due to weaker demand and sales volumes as inflationary pressures dampened discretionary spending and customers traded down to lower-value alternatives. Furthermore, higher raw material costs compressed margins, with 1H24 gross margins falling 3.3ppt y-o-y.
  • Although advertising and promotional (A&P) spending fell 28.9% y-o-y as the group reined in operating expenses, both 1H24 EBITDA and PATMI margins still tumbled 0.2ppt y-o-y. Similar to 1H24, both 2Q24 quarterly revenue (- 0.3% y-o-y) and PATMI (-6.8% y-o-y) also declined.

Expect better sequential performance.

  • Read more at SGinvestors.io.




Above is the excerpt from report by UOB Kay Hian Research.
Clients of UOB Kay Hian may be the first to access the full report in PDF @ https://www.utrade.com.sg/.




Llelleythan Tan UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-09-27



Previous report by UOB:
2023-11-22 Emperador - Stable 3Q23 Results Despite Falling Margins.

Price targets by other brokers at Emperador Target Prices.

Listing of research reports at Emperador Analyst Reports.

Relevant links:
Emperador Share Price History,
Emperador Announcements,
Emperador Dividends & Corporate Actions,
Emperador News Articles





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