TRC’s 9MFY12 topline and net profit of RM371.6m and RM6.0m respectively were above our numbers but below consensus estimates, as the prolonged delay at its RM950m LRT extension project finally ended. With the progress of its single biggest contract now back on track, we are upgrading our FY12 net profit forecast by 13.9%, while keeping our FY13 and FY14 numbers largely unchanged. Maintain TRADING BUY, with FV retained at RM0.83, based on an unchanged 10x FY13 PER.
Strong rebound offset by higher taxes. TRC’s 9MFY12 revenue surged 25.3% y-o-y to RM371.6m as progress at its LRT extension project finally normalised in early 3Q after having obtained all the necessary approvals in April this year. Its core earnings, however, slumped 45.6% y-o-y to RM6.0m owing to the >150% jump in effective tax recorded. On a quarterly basis, the 3QFY12 numbers would have shown encouraging q-o-q and y-o-y improvements if not for the bumper taxation of RM5.9m, which translated into an effective tax rate of 54.0% during the quarter under review.
Revising forecasts. While we understand that higher taxation is likely to also make an impact on TRC’s 4QFY12 results, as witnessed in 3QFY12 due to under-provisioning in earlier years, we find comfort in that its LRT extension project has finally gotten back on track. Hence, we are revisiting our model and upgrading our FY12 net profit forecast by 13.9% to RM10.1m, while keeping our FY13 and FY14 numbers largely unchanged at this juncture.
TRADING BUY. All in, we are positive on TRC’s 9MFY12 results now that its LRT extension project is gaining pace. We believe the stock, which has declined by more than 15% YTD, could be ripe for a major re-rating in view of its solid orderbook of over RM2.2bn, and with the earnings disappointments now officially over. Maintain TRADING BUY, with our FV unchanged at RM0.83, based on a 10x FY13 PE.
FYE Dec (RMm)
|
FY10
|
FY11
|
FY12f
|
FY13f
|
FY14f
|
Revenue
|
376.7
|
400.8
|
552.2
|
861.0
|
1,021.9
|
Net Profit
|
16.2
|
13.0
|
10.1
|
38.9
|
45.4
|
% chg y-o-y
|
-40.7%
|
-19.8%
|
-22.3%
|
286.0%
|
16.6%
|
Consensus
|
16.5
|
42.3
|
50.4
| ||
EPS (sen)
|
3.5
|
2.8
|
2.2
|
8.3
|
9.7
|
DPS (sen)
|
1.6
|
1.5
|
1.3
|
4.2
|
4.8
|
Dividend yield (%)
|
2.7%
|
2.6%
|
2.2%
|
7.2%
|
8.4%
|
ROE (%)
|
5.5%
|
4.3%
|
3.2%
|
12.0%
|
13.2%
|
ROA (%)
|
3.5%
|
2.9%
|
2.1%
|
7.1%
|
7.2%
|
PER (x)
|
16.8
|
20.9
|
26.9
|
7.0
|
6.0
|
BV/share (RM)
|
0.64
|
0.66
|
0.67
|
0.71
|
0.76
|
P/BV (x)
|
0.9
|
0.9
|
0.9
|
0.8
|
0.8
|
EV/EBITDA (x)
|
2.9
|
9.4
|
6.3
|
3.0
|
2.3
|
Results Table (RMm)
FYE Dec
|
3Q12
|
2Q12
|
Q-o-Q chg
|
YTD FY12
|
YTD FY11
|
Y-o-Y chg
|
Comments
|
Revenue
|
158.8
|
118.1
|
34.5%
|
371.6
|
296.6
|
25.3%
|
Encouraging 3QFY12 numbers as the LRT extension project got back on track, but was offset by higher taxes paid
|
EBIT
|
9.9
|
0.2
|
>100%
|
12.9
|
15.4
|
-16.2%
| |
Net interest expense
|
1.0
|
1.0
|
-0.1%
|
2.8
|
1.1
|
>100%
| |
Associates
|
0.0
|
0.2
|
->100%
|
0.5
|
-1.5
|
->100%
| |
PBT
|
10.9
|
1.4
|
>100%
|
16.2
|
15.0
|
7.8%
| |
Tax
|
-5.9
|
-1.8
|
>100%
|
-10.2
|
-4.1
|
>100%
| |
MI
|
0.0
|
0.0
|
0.0%
|
0.0
|
0.0
|
0.0%
| |
Net profit
|
5.0
|
-0.4
|
->100%
|
6.0
|
11.0
|
-45.6%
|
That said, the 9MFY12 numbers still beat our previous forecasts as we had earlier expected a longer gestation period before its LRT extension project goes full steam
|
EPS (sen)
|
1.1
|
-0.1
|
1.3
|
2.3
| |||
DPS (sen)
|
0.0
|
0.0
|
0.0
|
1.7
| |||
EBIT margin
|
6.2%
|
0.2%
|
3.5%
|
5.2%
| |||
NTA/Share (RM)
|
0.66
|
0.67
|
0.66
|
0.66
|
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