Censof’s 9MFY12 earnings fell short of expectations, making up only 46%/54% ofour/consensus’ full-year estimates. Its cumulative 9MFY12 revenue and earningsslipped 18% and 27% y-o-y to RM27.1m/RM4.9m respectively. We are cutting ourFY12 earnings forecasts by 20% to realign our estimates to incorporate thecompany’s weak nine-month financial performance. However, we are leaving ourFY13 forecasts unchanged on the confidence that the numbers are achievable.Maintain NEUTRAL, with FV unchanged at RM0.34, based on a 9x FY13 PE.
Missing estimates. Censof’s 9MFY12 earnings missed expectations, making up only 46% and 54% of our and consensus’ full-year estimates. The company’s cumulative 9MFY12 revenue and earnings slipped 18% and 27% y-o-y to RM27.1m and RM4.9m respectively. However, management attributed the decline mainly to the rapid recognition of the Outcome Based Budgeting project last year. Stripping off the RM9m revenue and RM2m net profit contributed by the project, Censof’s 9M revenue and earnings wouldhave gone up by 14% and 2% y-o-y.
Missing estimates. Censof’s 9MFY12 earnings missed expectations, making up only 46% and 54% of our and consensus’ full-year estimates. The company’s cumulative 9MFY12 revenue and earnings slipped 18% and 27% y-o-y to RM27.1m and RM4.9m respectively. However, management attributed the decline mainly to the rapid recognition of the Outcome Based Budgeting project last year. Stripping off the RM9m revenue and RM2m net profit contributed by the project, Censof’s 9M revenue and earnings wouldhave gone up by 14% and 2% y-o-y.
Management sees more upbeat 4Q. On a quarterly basis, the company’s 3Q net profit soared 60% q-o-q to RM1.8m owing to an increase in recognition of higher-margin related projects. However, its top-line shrank 60% q-o-q. For 4Q, Censof expects to beef up revenue by recognizing more projects from its orderbook, now worth RM65m. We understand that management has also indentified RM150m worth of potential business to replenish orders. Traditionally, it has been achieving a win rate of 20%-25%, which translate into a potential replenishment amounting to RM30m-RM38m. Management is also targeting to match its FY11 net profit of RM9.5m, suggesting that the 4Q bottom-line will grow by 250% q-o-q, due to the low base in 3Q.
Maintain NEUTRAL, FV unchanged at RM0.34. Despite management’s upbeat guidance, we are trimming our FY12 earnings forecast by 20% in order to realign our estimates to factor in the weaker 9MFY12 financial performance. However, we are not making any changes to our FY13 forecast as we reckon it would be achievable. We maintain our NEUTRAL recommendation on the stock, with our FV unchanged at RM0.34, based on a 9x FY13 PE.
Source: OSK
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