Defensive lower-end consumer food manufacturer

Sterling FY9/08 results, above expectations. Etika reported FY9/08 results with net profit growth of 341.3% to RM40.3m on the back of 51.3% growth in revenue to RM592.3m. The strong performance was largely due to the Dairies Division, which contributed 68% to Group EBIT, although all business divisions also performed well.

Ongoing access to trade finance for working capital remains a key
concern. In view of the sterling FY9/08 performance, Group gearing has
improved from 1.73x (FY9/07) to 1.28x (FY9/08). However, Etika still heavily
relies on trade financing for its operations. About 66% of total debt of
RM159.0m (FY9/08) is short-term debt. In light of tight credit facilities, the key risk is the ongoing availability of trade financing facilities for the Group’s working capital needs.

Fair Value S$0.23