Re-launches will boost Dutch Lady

�The company plans to re-launch its enhanced formulation of the popular Dutch Lady 123, 456 and ultra heat treated (UHT) milk to strengthen its position in the chilled milk segment in the country. 

�Apart from that, it also plans to introduce two products this year, one of which is a yogurt drink that will be launched as early as this week,� it said.

In response to this, the research house is raising its earning per share (EPS) forecast for Dutch Lady by 11% to 49 sen for the financial year ending Dec 31, 2006 and by 10% to 53.2 sen for financial year 2007.

�Generally, launches and re-launches translate into better sales, as they are typically accompanied by a promotional campaign and enhanced store visibility via the setting up of buntings and sampling booths,� the report added.

To date, Dutch Lady has captured 30% share of the growing-up milk segment and 59% of the UHT milk segment in the local market.

The research house is also raising its dividend per share (DPS) projection for the company from 11.5 sen last year to 57.7 sen this year, which includes a special dividend of 40 sen.

For the financial year 2005 (FY05), Dutch Lady has so far paid 76.3 sen DPS, consisting of an interim dividend of 6.25 sen and two special dividends of 30 sen and 40 sen.

�This is the first time in its 38-year listing history that the company has paid two special dividends in a single year. 

�We assumed that there would be no more dividends for FY05 but, given the company�s RM30mil cash (47 sen/share) and zero debt as at end-September 2005, it can easily declare a final dividend,� noted CIMB Securities.

It projected a final dividend of 11.5 sen for FY05, taking the period dividend yield to 11.9%, one of the highest in the market. 

On FY05 result prospects, CIMB Securities is raising its EPS forecast, as the company had achieved an optimistic year-on-year sales growth of 9.5% on its UHT milk segment, higher than its projection of 5%.

�In view of the stronger-than-expected sales in its fourth quarter, we are raising our EPS forecast by 8% to 42.2 sen, which translates into a year-on-year growth of 37%,� it said.

CIMB Securities has forecast Dutch Lady's FY05 net profit of RM27mil, up 37% from RM19.7mil recorded for financial year ended Dec 31, 2004. Group revenue is estimated at RM493.9mil, 17.5% higher than the previous RM420.5mil.