Boilermech’s 1HFY13 earnings of RM10.7m was largely in line with our forecasts, accounting for about 48.3% of our full-year estimates. 2QFY13 earnings were higher y-o-y on improved margin. We like Boilermech for its solid balance sheet and the potential boost from its upcoming expansion. It is also set to benefit from the growth in the palm plantation sector. We are maintaining our Neutral call on Boilermech with a fair value of RM0.98, pegged at a 5-year average PE of 11.5x on its projected FY13 earnings.
Improved performance on higher-margin projects. 1HFY13 net earnings took a 48% leap to RM10.7m, on the back of a 22% jump in revenue to RM87.3m. The better performance was due to higher contribution from its boiler manufacturing. Its manufacturing segment saw a 22% increase in revenue contribution to RM84.4m while its PBT contribution surged by 44.6% to RM13.1m. 1HFY13 EBIT margin improved from 13.3% last year to 16.7%, mainly due to contribution from higher-margin projects in the oil and gas sector. 2QFY13 earnings were relatively flat at RM5.2m compared to 1QFY13’s RM5.4m, despite a 7.5% increase in revenue to RM45.2m. The lower bottom-line was due to higher operating expenses during the quarter under review as well as the impact from the reversal of foreign exchange gain.
Improved performance on higher-margin projects. 1HFY13 net earnings took a 48% leap to RM10.7m, on the back of a 22% jump in revenue to RM87.3m. The better performance was due to higher contribution from its boiler manufacturing. Its manufacturing segment saw a 22% increase in revenue contribution to RM84.4m while its PBT contribution surged by 44.6% to RM13.1m. 1HFY13 EBIT margin improved from 13.3% last year to 16.7%, mainly due to contribution from higher-margin projects in the oil and gas sector. 2QFY13 earnings were relatively flat at RM5.2m compared to 1QFY13’s RM5.4m, despite a 7.5% increase in revenue to RM45.2m. The lower bottom-line was due to higher operating expenses during the quarter under review as well as the impact from the reversal of foreign exchange gain.
Expansion on schedule. Boilermech has completed the acquisition of a 1.45 acres land near its Subang Jaya premises in November 2012. With the acquisition complete, the company would now be doubling its production floor spare to 140,900 sq ft and thus increasing its boiler production capacity from five boilers per month to about eight to 10 boilers by April 2013.
RM0.98 FV. With its quarterly performance largely in line with our estimates, we are leaving our forecasts unchanged. We are maintaining our NEUTRAL recommendation on Boilermech with a FV of RM0.98, pegged at an average PE of 11.5x on its projected FY13 earnings. The company’s fundamental remains intact, backed by a strong balance sheet. We believe that with its production capacity set to double by April 2013, Boilermech is well positioned to benefit from the growth in the palm plantation sectors of both Malaysia and Indonesia.
RM0.98 FV. With its quarterly performance largely in line with our estimates, we are leaving our forecasts unchanged. We are maintaining our NEUTRAL recommendation on Boilermech with a FV of RM0.98, pegged at an average PE of 11.5x on its projected FY13 earnings. The company’s fundamental remains intact, backed by a strong balance sheet. We believe that with its production capacity set to double by April 2013, Boilermech is well positioned to benefit from the growth in the palm plantation sectors of both Malaysia and Indonesia.
Source: OSK
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