National Enterprises Limited (NEL)

For the quarter ended June 30, 2012, National Enterprises Limited (NEL) reported a 10.5 per cent increase in Earnings per Share of $0.21 relative to $0.19 for the corresponding period in 2011. TRINGEN and NGC LNG outperformed the other two Investee companies and contributed significantly to the improvement in Profit for the period.

NEL's Share of Profit of Equity Accounted Investees (SOP) closed at $123.04m, an increase of 7.1 per cent over the similar figure for the first quarter of 2011. TRINGEN was the largest contributor to SOP of $52.05m. The second largest contributor to SOP was NGC NGL of $47.23m, although this represented a 13.4 per cent year on year decline. NGC LNG demonstrated signs of recovery, contributing $14.54m to SOP, an upturn from a loss of $0.127m in the first quarter of last year. TSTT's $9.22m contribution to SOP, a 41.8 per cent fall over the comparative figure for the first quarter of 2011, made it the poorest performing Investee Company. The Contribution to SOP is depicted in Exhibit 1 and Exhibit 2.

The combined performance of NEL's Investee Companies and Subsidiary resulted in Profit before Tax of $123.36m, a 6.8 per cent increase and Profit after Tax of $122.69m, a 7 per cent increase.

At a current price of $15.10, NEL is trading at a trailing P/E of 14.8 times, close to its 3 year average of 14. The Company's Dividend Yield is currently 4.64 per cent making it the second highest yielding dividend stock on the market. BOURSE recommends a HOLD.

National Flour Mills Limited (NFM)

For the sixth months ended June 30th 2012, National Flour Mills Limited (NFM) reported an Earnings per Share of $0.03. There was a positive turnaround in Gross and Operating Profits compared to a loss in 2011. The principal reason for this was the decline in grain prices during the first six months of the year.

For the half year, Turnover declined 3.1 per cent to close at $208.31m versus $214.91m a year ago (Exhibit 3). Similarly, Cost of Sales fell 8.6 per cent to $172.44m. This fall in Cost of Sales was largely influenced by the average of 12 per cent reduction in wheat prices on a year on year basis for the six months. These movements shifted Gross Profit Margin up to 17.2 per cent from 12.2 per cent.

Total Expenses went up 5.5 per cent mainly because of Selling and Distribution Expenses which rose 27 per cent to $18.63m. The latter can be attributed to NFM's aggressive marketing strategy aimed at diversification of the portfolio of current product offerings.

Other Operating Income grew by a noteworthy 47.1 per cent to end at $5.67m. The improvement in Operating Profit was also notable and closed at $11.22m compared to $1.29m a year ago, driving up the Operating Profit Margin to 5.4 per cent from 0.6 per cent.

There was a significant 184.2 per cent turnaround in Profit Before Tax to $4.27m, relative to a loss of $5.07m for the same period in 2011. Also, Profit after Tax improved by 171.9 per cent closing at $3.65m versus a loss of $5.07m a year ago. The resulting Profit after Tax Margin for the six months was 1.75 per cent.

The company acknowledges that the favourable decline in grain prices is indefinite and has engaged in several initiatives to hedge against rising grain prices as well as enhance operational efficiencies, including the introduction of new product lines to improve and broaden their portfolio of current product offerings.

At a current price of $0.68, NFM is trading at a trailing P/E multiple of 19.2 times, a discount to its 3 year average of 26.9. BOURSE therefore recommends a HOLD on this stock.

Agostini's Limited (AGL)

For the nine months ended June 30, 2012, Agostini's Limited (AGL) reported a 4.9 per cent rise in Earnings per Share (EPS) of $0.86 relative to $0.82 for the same period in 2011. Group Revenue and Profit after Tax was better than the corresponding period in 2011, however performance in the third quarter was not up to par because of the fall out in Sales in the consumer segments due to the stagnant domestic economic climate.

Group Revenue closed at $991.26m versus $968.21m for the comparable period in 2011, an increase of only 2.4 per cent (Exhibit 4).

Operating Profit remained relatively flat, declining 1 per cent to close at $79.59m, shifting Operating Profit Margin down to 8 per cent from 8.3 per cent.

There was a 25.2 per cent reduction in Finance costs to $8.8m from $11.77m a year ago. Profit before Tax increased 3.2 per cent to $70.78m and Profit after Tax margin inched up to 5.1 per cent.

In terms of the Balance Sheet, Assets contracted 1.2 per cent closing at $750.34m. Similarly, Liabilities declined 12.9 per cent to $321.57m while Equity increased 9.9 per cent ending at $428.77m.

Overall Group performance improved marginally. AGL's strategy going forward is the re-alignment of the consumer product offering. Some brands were withdrawn from the market while new product lines were introduced to the consumer segments such as the Moo brand of UHT milks.

For the next 18 to 24 months, there will be further new product and brand introductions to the market.

At a current price of $15.37, AGL is trading at a trailing P/E of 14.2 times with a Dividend yield of 2.9 per cent. BOURSE therefore recommends a HOLD.