Faber’s FY11 results came in well ahead of our and consensus
expectations, with its FY11 net profit making up 246% and 169% of the
respective FY11 net profit forecasts. The outperformance was largely due to
higher-than-expected revenue coupled with the reversal of cost amounting to
RM40.7m in 4QFY11 in relation to the recognition of expenses in 3Q for its IFM
contracts in the UAE. We maintain our FY12 forecast and introduce our FY13 forecast. We are
keeping our Trading Buy call on Faber at a slightly higher FV of RM2.34 from
RM2.24 previously after rolling over our SOP valuation from FY11 to FY12.
A comprehensive
outperformance. Faber recorded a net profit of RM60.2m for FY11 which was
well above our and consensus estimates, accounting for about 246% and 169% of
the respective forecasts. The better-than-expected results could be attributed
to the sizzling revenue but primarily the reversal of cost amounting
to RM40.7m in 4Q in relation to its IFM contracts in UAE. In 3Q, Faber has
recognized expenses of RM44.5m for additional work done for its IFM
contracts in the UAE and
impairment losses of RM12.9m arising from the expected delay in collecting trade receivables from
the contracts, both of which had resulted in a net loss of RM26.9 in 3Q. If we exclude the cost reversal, Faber’s FY11
net profit would come well within our expectations.
Segmental
performance. The IFM concession business remained the biggest contributor
to the group’s topline, constituting about
61.9% of the FY11 total revenue. Y-o-y revenue from its IFM
non-concession business was down by 31.7% due to the non-renewal of contracts
in the
UAE. As expected, its property business recorded a strong y-o-y growth
in revenue which was up by 127.5% y-o-y, supported by the progress billings
from projects launched in 4QFY10 and 1HFY11. Overall, revenue was up marginally
by 2.2% y-o-y as the lower revenue contribution from the
UAE wasmitigated by the higher
revenue from its property division. Nevertheless, net profit was down by 23.6%
y-o-y attributed to the RM23.4m loss recorded by its IFM
nonconcession business.
Maintain Trading Buy.
We maintain our FY12 forecast as well as
introduce our FY13 forecast. We maintain our Trading Buy recommendation on
Faber at a slightly higher FV of RM2.34 from RM2.24 previously after rolling
over our SOP valuation from FY11 to FY12. Despite the delays in the renewal of
its hospital support services concession, we believe that Faber should have no problems getting the renewal given
its solid track record over the last 15 years. Our FY12
forecast is premised on the assumption that the concession would be
renewed according to the existing terms. Also,
Faber has announced a
gross dividend of 8 sen for FY11, which translates into
a gross yield of about 4.7%.
Source: OSK188
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