Period 1Q12
Actual vs. Expectations
Below consensus
estimate and that of ours.
1Q12 net profit of
RM29.2m came in only at 7% of ours and the consensus’ forecasts of RM437.4m.
Dividends No
dividend was declared during the quarter.
Key Result Highlights
QoQ, the net profit
dropped by 89% due to a drop in construction earnings. To recap, Zelan recorded
write-backs of LAD in 4Q11.
YoY, the revenue
increased by 4% and net profit dropped by 30%. This was mainly due to the impact
of a lower margin by 13% for Gas Malaysia due to the revision of gas tariffs in
June2011.
Nonetheless, the 1Q12
construction earnings were much better (YoY) as compared to the RM25m pre-tax
loss recorded in 1Q11.
Outlook We
believe that MMC’s feasibility study on the privatisation of KTMB will partly
cover the utilisation of KTMB’s landbanks for commercial developments.
We expect MMC-Gamuda
to be the frontrunner for MRT circle
line works, which are to be announced by mid-2013.
Change to Forecasts
Lowered our FY12 and
FY13 estimates by 21% and 13%, respectively, as we imputed in the dilution of
Gas Malaysia’s contribution and delayed the PDP recognition to 2H12 as MRT works
are still at their preliminary stage.
Rating OUTPEFORM
Maintain OUTPERFORM
Valuation We
have lowered our Target price to RM3.11 from RM3.20 previously as we imputed in
MMC’s shareholding dilution from 41.8% to 30.9% in Gas Malaysia.
Risks Delays
in MRT works and late deliveries of TBMs (Tunnel Boring Machine).
Source: Kenanga
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