KS Energy's 3Q net profit of $320k disappoints analyst

Despite revenue surging by 7.4%.

According to OCBC Investment Research, KS Energy (KSE) reported a 7.4% YoY rise in revenue to S$173.3m and a net profit of S$320k in 3Q13 vs. S$14k in 3Q12, such that 9M13 revenue and net profit accounted for 81% and 47% of OCBC's full year estimates, respectively.

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The lower-than-expected net profit was mainly due to a higher-than-expected share of minority interest. However, we would not read too much into this, as small changes in items above the line can bring about huge swings in PATMI given the relatively small quantum of net profit; our fair value is also based on P/NTA instead of P/E valuation. Gross profit margin was similar at 25.7% in 3Q13 compared to a year ago.