Period 4Q12/FY12
Actual vs. Expectations
The reported FY12
revenue of RM141m came broadly in line with expectations, accounting for 92% of
our full year estimate.
However, the net loss
of RM21.2m for FY12 was disappointing as against ours and the street’s net profit
estimates of RM5m and RM4m respectively.
Dividends No
dividend was declared.
Key Results Highlights
YoY, Fajarbaru
recorded net loss of RM20m in 4Q12 on the back of its revenue of RM8.3m. The higher
than expected loss was mainly due to total provision made for its ongoing
projects. The management is currently seeking to claim Variation Orders (V.O)
for some the projects that are currently behind schedule e.g. the LRT extension
project.
QoQ, its net loss
widened from RM4m to RM20m as there was no progress on its LRT extension project
while it has already incurred mobilisation and other preliminary cost on site.
Outlook Based
on our channel checks, the D.O. for LRT works has been approved by the state government
in April-12. Moving forward, we would expect the contribution from the LRT works
to kick in for FY13.
Its outstanding order
book of c.RM900m is equivalent to 6.4x of its FY12 revenue, which will provide
earnings visibility for another 3 years.
Change to Forecasts
We are maintaining
our FY13 estimates at this juncture pending more clarifications and guidance
from management.
Rating Maintain OUTPERFORM
We believe that the FY12 loss is just a temporary setback
for Fajarbaru as we understand that the progress for its LRT extension work
will improve from 2H12 onwards.
Valuation We
have revised our TP lower to RM1.13 as we ascribed a lower PER of 8x (from 9x)
on its FY13 earnings due to the weaker sentiment on the stock from delays in
the LRT extension project.
Risks Delay
in LRT works by the main contractors.
Escalating building
material prices.
Source: Kenanga
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