Friday 14 September 2012

Formis Resources - As expected, wins RM17.5mil e-court maintenance job Hold


- 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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