Period 3Q12
/ 9M12
Actual vs. Expectations The 9M12 net profit of RM6.0m came in largely inline
with ours but below street’s estimates, making up 60% and 36% of our FY12E net
profit and consensus respectively.
However, we expect that the group would be able to make up to our
forecast in 4Q12 given the speedier execution on major projects.
Dividends No
dividend was declared during the quarter.
Key Result Highlights
YoY,
the 9M12 net profit declined by 46% from RM11m to RM6m despite a 25%
increase in the revenue to RM371.6m. This was due to the narrowing net margin
recorded of 1.6% from 3.7% previously. The margin was negatively affected by
the higher administration costs incurred due to the delay of its LRT extension project
in the past quarters coupled with a much higher effective tax rate of 63.1% due
to under provisioned taxes in previous years.
QoQ, the 3Q12 bottom line improved substantially
from a loss of RM0.4m to a net profit of RM5.0m on the back of a 34.5% rise in the
revenue. This was driven by the progressing LRT works during the period and
contributions from the other ongoing projects like Samalaju Port dredging
works. The positive momentum was also attributable to the improvement in the pre-tax
margin from 1.2% to 6.9%.
Outlook TRC’s
order book currently stands at c.RM2.0b for the next three years. We expect TRC
to continue to bid for contracts in Sarawak and to also expand its property
development business.
Change to Forecasts No changes to our forecasts.
Rating Maintain MARKET PERFORM
We are maintaining
our MARKET PERFORM rating on the stock at this juncture.
However, any new
projects secured in the nearterm will act as re-rating catalysts.
Valuation We are
keeping our Target Price of RM0.63 based on an unchanged 8.0x Fwd PER on its FY13E
EPS of 7.9 sen.
Risks Further delays in the LRT/MRT projects.
Source: Kenanga
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