Period 1Q13/3M13
Actual vs. Expectations The
3M13 results came in within our expectations and that of the consensus. The
1Q13 net profit of RM23m accounted for 20% and 25% of ours and the consensus’
full year FY13 forecasts respectively. There were no surprises in the reported
earnings.
Dividends As
expected, no dividend was declared during the quarter.
Key Result Highlights YoY, the 3M13 net profit of RM23m was lower
than the previous year by 21%. The drop in net profit was in line with the
lower revenue of 23% recognised during the quarter. The lower recognition was
mainly due to the completion of a large proportion of the reclamation works in
Melaka. There were no land sales during the quarter as the management is wrapping
up some of the ongoing contracts in the near term.
QoQ, there were
sequentially better earnings, which increased by slightly more than one-fold.
The strong performance was mainly due to the higher recognition of its ongoing
projects like Sentosa Cove, Glenmarie Cove and TNBF contract (TNB Fuel Sdn
Bhd). In addition, the slower revenue recognition in 4Q12 was also attributable
to the previous strong earnings jump in 1Q13.
Outlook We
understand that management is currently working closely with some oil and gas
majors to clinch partnership deals to develop its Johor reclamation land. We
expect more news on this matter in early 2013. Moreover, the management is
expected to clinch a parcel of land deal in Melaka in the near term.
Forecasts No
changes to our FY13-14E earnings.
Rating Maintain
OUTPEFORM
Maintain OUTPERFORM
given the ample capital upside from the current price (+30%).
Valuation We
are keeping our TP unchanged at RM1.71 based on SOP valuation.
Risks A
slowdown in land sales (reclaimed lands) and prolonged EIA study result of its
Johor land.
Source: Kenanga
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