BRDB (FV RM2.98 - TRADING BUY) 1QFY12 Results Review: No Surprise

BRDB’s 1QFY12 results were within our expectations, with its net profit making up about 24.9% of our FY12 forecast. Revenue rose 13% y-o-y, attributed to revenue growth  in all its  business segments while PBT  soared  123% y-o-y, buoyed by significantly higher earnings contribution from its property development segment.  We maintain  our  forecast and  Trading Buy on BRDB, at  an  unchanged FV of RM2.98, based on 0.8x FY12 P/NTA. While there  are no earnings excitement, the potential disposal of BRDB’s investment properties may be an upward catalyst.

Within  forecasts. BRDB recorded a net profit of RM12.6m for 1QFY12, which was within our expectation and  accounted for about 24.9% of our FY12 forecast. Y-o-y revenue rose 13%, boosted by the higher revenue from all of its business segments. EBIT jumped 49.1% on improved margins, attributed to the bigger revenue contribution from its property development, which generally commands higher margins. Meanwhile, EBIT margin expanded to 18.4% in 1QFY12 compared with 13.9% in 1QFY11.

Segmental performance. Revenue from the company’s property development segment jumped  19.8% y-o-y, attributed to the sales of completed units at One Menerung and Troika condominiums, coupled with higher progress billings from on-going projects such as 6CapSquare and Verdana in Kuala Lumpur and Straits View Residences and Elita in Johor.  Property investment revenue climbed 17% y-o-y in line  with the increased occupancy of  Bangsar Shopping Centre, Menara  BRDB and Troika Commercial. Meanwhile  BRDB’s manufacturing division under Mieco recorded 13% y-o-y growth in revenue due to higher  demand and production capacity, especially of plain board exports. However, despite the better prices and sales volume, Mieco suffered a loss of RM1.8m in 1QFY12 against a loss of RM1.4m a year ago, mainly undermined by higher raw material costs.

Maintain Trading Buy. We maintain our forecast and Trading Buy on BRDB, but at an unchanged FV of RM2.98, based on 0.8x FY12 P/NTA, which is equivalent to about 1 standard deviation above the stock’s P/NTA mean over the last 5 years. While we do not see much  excitement in earnings, the potential disposal of  the company’s  investment properties may just be the upward catalyst for the stock.

Source: OSK