News Bina
Puri has announced that its 80% indirect subsidiary, PT. Megapower Makmur had
entered into an agreement with PT. PLN (Persero) of Wilayah Sulawesi Selatan,
Sulawesi Tenggara Dan Sulawesi Barat to build and operate a mini hydro power
plant with capacity of 4200 KW in South Sulawesi.
Comments This
is the sixth power plant concession secured by Bina Puri in Indonesia and it is
the first hydro power plant project secured by the company. The construction
will take 24 months to complete with an estimated cost of USD10m (RM31.8m).
The tenure of the
concession (PPA) is 15 years starting from the first year of its commercial operation
i.e. 2014.
Assuming a debt to equity
of 80:20, Bina Puri will need to fork out about RM6.4m for its equity portion.
As at 1Q12, its cash balance stood at RM64m, which is more than sufficient finance the project’s equity portion.
However, we are
unable to gauge the expected IRR and earnings contribution from this to Bina Puri
at this juncture, pending further guidance from management. However, any
contribution will likely only be in 2014 onwards and we are not for now
expecting any material contributions to group earnings in the near-term
although we will be relooking at our forecasts again after speaking to
management.
At present, Bina Puri
is operating 5 coal power plants in Indonesia, which had been contributing about
RM2.5m to its FY11 operating profit (around 7%).
Outlook Its current order book now stands at RM2.3b, which
will last until FY15.
Moving forward, Bina
Puri is expanding its property earnings via the launches of a few property
development projects in Klang Valley, Johor Bahru and Kota Kinabalu. The
estimated GDV for these projects will be more than RM1.5b.
Forecast No
changes to our FY12E and FY13E earnings.
Rating MAINTAIN OUTPERFORM
An attractive upside
of 43% to our TP of RM1.24.
Valuation We
maintain our Target price of RM1.24 with an unchanged 10x PER on FY12E EPS of
12.4sen.
Risks Delays
in construction projects.
Price escalation in raw materials and labour costs
Source: Kenanga
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