Eversendai Corp Bhd (Nov 11, RM1.60)
Maintain buy with target price RM2.17: Adjusting for one-off IPO expenses, 9M11 net profit of RM87 million (+44% year-on-year [y-o-y]) was within expectations, at 71% of our full-year forecast and 74% of consensus. Job-flow prospects remain bright, coming from key pump-priming markets where projects are populist demand-driven and have lower timing risk.
We maintain our 2012/13 forecasts but trim our 2011 earnings per share (EPS) forecast by 3% as we impute for the IPO expenses. The stock trades at low valuation of 8.7 times 2012 price earnings ratio (PER). Maintain “buy” and target price of RM2.17 (12 times 2012 PER).
Despite a stronger outstanding order book (+8% quarter-on-quarter) 3Q11 revenue of RM254 million was flattish q-o-q (+15% y-o-y) on: (i) absence of variation orders recognised in 2Q11; and (ii) slower construction activities during the Ramadan and Hari Raya Aidilfitri period.
Net profit fell q-o-q to RM26 million (-22% q-o-q, +25% y-o-y), largely due to the recognition of RM4 million IPO expenses and the absence of variation orders. Net profit (ex-IPO expenses) margin of 11.9% (-1.3 percentage points q-o-q, +2.3pps y-o-y) was 1pps above 1Q11’s 10.9%.
Expect a stronger 4Q11. We believe Eversendai’s earnings will stage a rebound, driven by its high-value and advanced stage projects, Cleveland Clinic, Gate District, NDIA III, Naqilat and Worli.
Additionally, we expect another RM500 million worth of jobs (at least) to be secured in the next three months to lift the quarterly earnings momentum. Job flow will come from local power plant expansion projects (Janamanjung, Tanjung Bin) and structural steelworks in the Middle East. We estimate that Eversendai’s outstanding order book stands at RM1.5 billion as at end-September 2011.
Imputing for the IPO expenses, our 2011 EPS forecast is trimmed by 3%. We maintain our 2012/13 forecasts as 62% of our 2012F RM1.2 billion revenue forecast (+13% y-o-y) is already in hand, based on the current order book.
Eversendai continues to stand out among the local construction peers due to its geographical diversification and superior margins. — Maybank IB Research, Nov 11
This article appeared in The Edge Financial Daily, November 14, 2011.
Maintain buy with target price RM2.17: Adjusting for one-off IPO expenses, 9M11 net profit of RM87 million (+44% year-on-year [y-o-y]) was within expectations, at 71% of our full-year forecast and 74% of consensus. Job-flow prospects remain bright, coming from key pump-priming markets where projects are populist demand-driven and have lower timing risk.
We maintain our 2012/13 forecasts but trim our 2011 earnings per share (EPS) forecast by 3% as we impute for the IPO expenses. The stock trades at low valuation of 8.7 times 2012 price earnings ratio (PER). Maintain “buy” and target price of RM2.17 (12 times 2012 PER).
Despite a stronger outstanding order book (+8% quarter-on-quarter) 3Q11 revenue of RM254 million was flattish q-o-q (+15% y-o-y) on: (i) absence of variation orders recognised in 2Q11; and (ii) slower construction activities during the Ramadan and Hari Raya Aidilfitri period.
Net profit fell q-o-q to RM26 million (-22% q-o-q, +25% y-o-y), largely due to the recognition of RM4 million IPO expenses and the absence of variation orders. Net profit (ex-IPO expenses) margin of 11.9% (-1.3 percentage points q-o-q, +2.3pps y-o-y) was 1pps above 1Q11’s 10.9%.
Expect a stronger 4Q11. We believe Eversendai’s earnings will stage a rebound, driven by its high-value and advanced stage projects, Cleveland Clinic, Gate District, NDIA III, Naqilat and Worli.
Additionally, we expect another RM500 million worth of jobs (at least) to be secured in the next three months to lift the quarterly earnings momentum. Job flow will come from local power plant expansion projects (Janamanjung, Tanjung Bin) and structural steelworks in the Middle East. We estimate that Eversendai’s outstanding order book stands at RM1.5 billion as at end-September 2011.
Imputing for the IPO expenses, our 2011 EPS forecast is trimmed by 3%. We maintain our 2012/13 forecasts as 62% of our 2012F RM1.2 billion revenue forecast (+13% y-o-y) is already in hand, based on the current order book.
Eversendai continues to stand out among the local construction peers due to its geographical diversification and superior margins. — Maybank IB Research, Nov 11
This article appeared in The Edge Financial Daily, November 14, 2011.
