Period 3Q12/9M12
Actual vs. Expectations
3Q12 results are
deemed to be within our expectations despite it being slightly higher than our
numbers as we expect a weaker 4Q12 due to likely one-off expenses.
The 9M12 net profit
currently made up 84% and 73% of ours and the consensus’ full year FY12 forecasts.
Dividends No dividend was declared during the quarter.
Key Result Highlights
QoQ, 3Q12 net profit
fell by 51% despite an 8% increase in revenue. The lower net profit was mainly
due to a one-off gain recognised in 3Q11 in relation to the acquisition of a
new subsidiary.
YoY, the revenue and
net profit drop by 12% and 2% respectively. This was mainly due to higher reclamation
cost spent in the period for the DMDI project in Melaka. There will be no
revenue and profit being recognised until the disposal of the land to the
buyer. That said, the completion of the land sale is expected in 2HCY12.
Management has guided
that there will be additional cost to be incurred in the 4Q12 results due to
ESOS exercise costs.
Outlook Management is actively looking for more reclamation
works in Sarawak and Peninsular Malaysia. As the development in Samalaju Industrial
Area is quite encouraging, we believe that there will be a lot more marine
construction and vessel chartering contracts available for Benalec.
The recent TNB
contract will provide about RM4m to RM5m to Benalec’s pre-tax profit per annum
starting from May 2012 to April 2015, which we have already imputed for in our estimates.
Forecasts No
changes in our FY12 and FY13 forecasts.
Rating OUTPEFORM
Maintain OUTPERFORM
given the ample upside potential to our Target Price from the current share
price.
Valuation There
is no change to our Target Price of RM2.37 based on SOP valuation.
Risks A
slowdown in land sale (reclaimed land).
Source: Kenanga
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