Period 1Q13
Actual vs. Expectations
The 1Q13 core net profit of RM102m came in broadly in line with ours and the consensus’ FY13 full year expectations at 19%. 1Q is generally a weaker quarter for IJM especially for its plantation division.
During the period, IJM recorded a RM21m exceptional gain from its property division and a RM34m forex loss from its industrial and infrastructure division.
Dividends No dividend was declared during the period as expected.
Key Result Highlights
QoQ, the core net profit drop by 3% to RM102m on the back of a 14% lower revenue recognition. This was mainly due to a 10% lower contribution from its plantation division due to the seasonality factor. Its construction pre-tax profit was marginally lower by 1% on the back of a 7% drop in revenue. Its property division revenue and pre-tax profit meanwhile dropped by 30% and 40% respectively.
YoY, the revenue was flat while the core net profit dropped by 11%. This was attributed to lower earnings contribution from the plantation division, which dropped by 56% at the pre-tax level. However, the construction revenue increased by 15% while the pre-tax profit increased by 138% as higher profits were recognised for its completed and ongoing projects i.e. Grand Hyatt Hotel KL and the Pahang-Selangor Water Transfer project.
Outlook Management expects the WCE concession to be signed by next month. This will add another RM4.0b to RM4.5b worth of construction order book replenishment for IJM, adding to its current order book of c. RM3b.
Change to Forecasts
We have lowered our FY13-14E estimates slightly by 3% and 4% on a lower plantation earnings forecasts.
Rating Maintain OUTPERFORM
Maintain OUTPERFORM with 10% capital upside.
Valuation Maintaining our Target Price of RM5.74 based on SoP valuation.
Risks Delays in contract award for WCE and ETP based projects.
Source: Kenanga
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