Bina Puri Holdings - RM155m contract to kick start the year

News    Bina Puri (“BPURI”) announced that Konsortium Bina Puri-Beringin Waja had accepted a RM155m contract award from Jabatan Kerja Raya (JKR) for the design and construction of the Malaysian Embassy in Moscow, Russia.

Comments   We are positive on the RM155m contract award from JKR as this would be BPURI’s first contract award in 2013. However, the job has no impact to our FY13 earnings estimates as it is deemed to be part of our order book replenishment forecast.

 The job scope encompasses the design and built works for the construction of the Malaysian Embassy in Moscow, Russia and is anticipated to be completed in 36 months upon commencement. To recap, this would be the second embassy project awarded to BPURI as it had earlier constructed the Malaysian Embassy in Beijing, China and undertaken several international projects in the past. 

 BPURI’s current order book now stands at c.RM2b and this should provide earnings visibility for the group for another two years.

Outlook   Moving forward, we believe that with the completion of KLIA2 in June 2013, it would free up the company’s cash flow and allow the group to bid for other projects.  

Forecast   No changes to our FY12E and FY13E earnings.

Rating     Maintain UNDERPERFORM.

 

Valuation    We are maintaining our Target Price of RM0.40 based on 5.0x PER of FY13 earnings. 

Risks   Delays in construction projects.

 Escalation in its raw materials and labour costs.

Source: Kenanga