Beating expectations. Censof’s FY12 earnings came ahead of expectations, beating our/consensus estimates by 10%/17%, due to our overprovision of other opex by MYR1m. The company’s FY12 revenue/earnings grew by 2.7%/6.5% y-o-y respectively on the back of the inclusion of Knowledgecom SB in November 2012, an 80%-owned subsidiary primarily engaged in IT e-training and management courses. Excluding the contribution from Knowledgecom, its FY12 revenue/earnings would have declined by 0.8%/2.1% y-o-y. The group maintained its bottom-line margin of 20%, which would have improved by 1% if the newly acquired training solution business had been added. Censof, which currently has an outstanding orderbook of MYR42m, did not declare any dividends for the year.
Higher revenue recognition from OBB project in 4Q. On a quarterly basis, the company’s 4Q revenue jumped to MYR17.9m from 3Q’s MYR5.3m, thanks to a better showing from its financial management solution business (FMS). The division grew to MYR14.5m from a quarter ago (+RM10.2m), mainly on higher revenue recognition from its Outcome Based Budgeting (OBB) project. Consequently, the group’s 4Q bottom-line improved to MYR4.6m from 3Q’s MYR1.8m, but margin dipped 7% given the low margin nature of the OBB project.
Ceasing coverage. Although Censof reported decent FY12 results and it may very well benefit from the potential implementation of GST after the imminent General Election, we are ceasing coverage on the company due to internal resource reallocation. Our last recommendation on the stock was NEUTRAL, with a FV of MYR0.34, based on a 9x FY13 PE.
Source: OSK
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