KUALA LUMPUR (April 23): RHB Research Institute Sdn Bhd has cut its fair value for TRC Synerygy Bhd to 85 sen from 96 sen.
In note Monday, the research house maintained its outperform rating on the stock and said TRC had reiterated that it was going all-out for work packages for the Sg Buloh-Kajang (SBK) Line of Klang Valley MRT project but will stick with its stance of not unduly compromising on margins.
The research house said that in the immediate term, TRC does not expect significant expansion in CONSTRUCTION [] margins as construction earnings will predominantly be underpinned by two key contracts, i.e. LRT line extension and Brunei airport that command relatively lower margins.
“In a brighter note, the recent soft launch of TRC’s gated and guarded property project called Ukay Tropika in the Ulu Klang area with a GDV of RM90m was a runaway success, it said.
“FY12-14 net profit forecasts cut by 8-14%, having reflected lower blended construction EBIT margins of 6.6-7.4% (8.6-8.8% previously), partially cushioned by contribution from Ukay Tropika.
“Fair value is reduced by 12% from RM0.96 to RM0.85. Maintain Outperform,” it said.
In note Monday, the research house maintained its outperform rating on the stock and said TRC had reiterated that it was going all-out for work packages for the Sg Buloh-Kajang (SBK) Line of Klang Valley MRT project but will stick with its stance of not unduly compromising on margins.
The research house said that in the immediate term, TRC does not expect significant expansion in CONSTRUCTION [] margins as construction earnings will predominantly be underpinned by two key contracts, i.e. LRT line extension and Brunei airport that command relatively lower margins.
“In a brighter note, the recent soft launch of TRC’s gated and guarded property project called Ukay Tropika in the Ulu Klang area with a GDV of RM90m was a runaway success, it said.
“FY12-14 net profit forecasts cut by 8-14%, having reflected lower blended construction EBIT margins of 6.6-7.4% (8.6-8.8% previously), partially cushioned by contribution from Ukay Tropika.
“Fair value is reduced by 12% from RM0.96 to RM0.85. Maintain Outperform,” it said.
