- We maintain Hold on Formis Resources Bhd (FRB), with an
unchanged fair value of RM0.83/share, based on an FY13F core EPS of 7.5 sen on
a PE of 11x.
- FRB last evening announced that its wholly-owned subsidiary
Formis Network Services Sdn Bhd (FNS) had been awarded a tender by the Chief
Registrar’s Office of the Federal Court of Malaysia to provide comprehensive maintenance
for the application system, equipment and eCourts support services in
Peninsular Malaysia for a total contract sum of RM17.5mil.
- It is subject to a formal agreement to be entered into between
the Federal Court and FNS in due course. The contract is for a duration of two
years and will contribute to earnings for the fiscal years ending 31 March 2013
and 2014.
- The announcement is not a surprise as we had expected FRB
to secure the e-court maintenance contract as it had undertaken the RM70mil
first phase rollout. Furthermore, it owns the IP rights to the system.
- The first phase involved the computerisation of three
court management systems for 166 courts in Selangor, Kuala Lumpur, Putrajaya,
Penang, Johor and Sarawak.
- In the latest earnings season, FRB announced its net loss narrowed
to RM4mil in 1QFY13 from a loss of RM11mil in the previous quarter and versus a
profit of RM8mil a year earlier.
- We maintain our forecasts as we expect its results to improve in the ensuing quarters, albeit
potentially with a downside bias to our projections. Additionally, the e-court maintenance
job would support bottom line.
- As at 30 June, 2012, FRB’s outstanding order book totalled
RM158mil (vs. RM100mil as at 31 March 2012) and with the latest contract, the
jobs secured so far in FY13F would likely have risen to over RM100mil.
- In the pipeline are over RM800mil worth of jobs, spanning across
its entire business chain in distribution, networks, software, solutions and
systems.
- We maintain our new order book assumption at RM300mil (+20%
YoY) for FY13F vs. an estimated RM250mil realised in FY12. Maintain HOLD for
now.
Source: AmeSecurities
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