Period 2Q12 / 1H12
Actual vs. Expectations
The 1H12 core net profit of RM9.5m exceeded expectations
slightly, making up 56% of our FY12E
core earnings of
RM17.1m on the
back of higher than expected
construction contributions.
Dividends None
as expected.
Key Results Highlights
YoY, the 1H12 core earnings grew 258% after stripping out
1H11 one-off gains (prepaid land gains on disposal of RM19m). Growth was also driven
by 1H12 construction revenue, which rose 52% YoY against a slight margin
compression of -0.8ppt in operating margins to 3.8%. The key ongoing contracts
are Menara Binjai, Verticas, UniTapah. This helped to mitigate softer 1H12 property
development operating profit (-19% YoY)
as the group
is focusing on
completing its Alam Idaman
project, which is near completion/completed.
QoQ, a higher finance cost (+13% QoQ) eroded the impact of
the revenue increase of 15% to RM155.5m, resulting in 2Q12 net profit sliding
by 8% to RM4.6m.
Outlook CBH will be looking to roll out its Dang
Wangi project in 2H13.
We also expect
CBH to firm
its JV project to develop the Lembaga Getah Malaysia (MRB) site (GDV:
RM1.33b). Since UniTapah concession earnings will commence in FY14E, we expect
the group to work towards ring-fencing the concession to allow for better net
gearing levels. Currently, the net gearing has improved to 0.79x from last
quarter’s 0.84x.
Change to Forecasts
Maintaining FY12-13E core earnings pending our upcoming
company visit. Estimates are based on 1) FY12-13E construction orderbook replenishment
of RM250m-RM350m, 2) targeted FY12-13E property sales of RM105m-RM271m.
Rating Maintain OUTPERFORM
CBH is at its inflection point for a re-rating as it moves
from its traditional construction business into the property development scene
while riding on the ETP play with Dang Wangi and MRB.
Valuation Maintaining TP of RM1.49 based on a 10% ‘holding
company’ discount to our FD SoP of RM1.67, inclusive of a 55% discount on
property.
Risks Capital management risks as well as property
and construction sector risks, including negative policies and slow contract
awards.
Source: Kenanga
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