Period 2Q13/1H13
Actual vs. Expectations The 1H13 results came in slightly lower
than our expectations and the consensus. The 1H13 core net profit of RM222m
accounted for 44% of ours and the consensus’ FY13 full year forecasts respectively.
Its underperforming plantation division was the main drag to its earnings.
Dividends A 4 sen interim (single tier) dividend was declared.
Key Result Highlights
The 1H13 core net profit of
RM222m increased by 18% on the back of a marginal increase in the revenue by
2%. The lower revenue growth was mainly due to the poor performance of its plantation
division as the total FFB production fell by 25% coupled with a flat average
CPO price (RM3,024 per MT). Its construction division pretax profit grew by
168% as its margin doubled from 3% to
7% and the
revenue increasing by 25%. The positive construction division
results were attributable to the satisfactory work-inprogress of its ongoing
projects like PahangSelangor Water Transfer project and MRT.
QoQ, the 2Q13 revenue and core net profit increased by 10%
and 19% respectively. This was due
to a higher
FFB volume of
48%. The construction net
earnings came down marginally by 3% as the pre-tax profit dipped 1% lower.
YoY, the net
profit soared by
62% as the construction pre-tax profit increased by
two-fold. This was due to the higher margin for its ongoing projects and the
additional earnings or savings from the just-completed projects.
Outlook The sentiment could turn weaker on IJM
due to the election risk and the delays
in finalising its WCE concession.
Change to Forecasts We
have lowered our
FY13 estimate by
9% as we had toned down our
plantations earnings forecasts.
Rating MAINTAIN
MARKET PERFORM
We are maintaining our MARKET PERFORM rating due to the
limited capital upside.
Valuation We have lowered our TP from RM5.00 to
RM4.72 based on a SOP valuation.
Risks Delays in contract award for WCE and ETP
based projects.
Source: Kenanga
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