Period 1Q12
Actual vs. Expectations
1Q12 net profit of
RM1.3m came in below ours and streets estimates, making up 5% and 4% of our
FY12E net profit and that of the consensus respectively, due to delays in LRT
extension works.
Dividends No
dividend was declared during the quarter.
Key Result Highlights
YoY, 1Q12 revenue
reduced by 6% for the same reason as mentioned above.
QoQ, 1Q12 pretax was
back in the black at RM3.9m compared to last quarter’s loss of RM0.2m. Its
property division saw margin expansion to 46% from 4Q11’s 9%.
Outlook TRC’s
order book currently stands at c.RM1.8b which provides 3-years earnings
visibility.
Management guides
that the LRT extension works should pick-up pace in 2H12 as the Development
Orders have been obtained in April 2012.
Based on our channel
checks, we believe that TRC will be extending its presence into East Malaysia
as they have been actively bidding for dredging works in Samalaju.
Change to Forecasts
Lowering FY12E
estimates by 33% to RM18.2m, as we factor further delays on LRT extension works.
But we maintain FY13E earnings at RM44.2m as chain-effect of the earnings delay
will materialize in FY14E. We expect LRT project contributions to commence in
4Q12.
Rating Maintain OUTPEFORM
TP of RM0.82 implies
28% upside to current share price which will be buoyed by positive construction
news flow and new contracts.
Valuation We
lowered our Target price to RM0.82 from RM0.94 previously based on unchanged
12x PER on average FY12-13E EPS of 6.9sen.
Risks Further delays in LRT/MRT projects.
Source: Kenanga
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