TRC Synergy (HOLD)
A poor finish but looking forward
- FY11 PATAMI contracted by 16% to RM13.5m (2.91 sen/share), making up only 84% and 85% of HLIB and consensus expectations respectively.
- Ending on a limp… Unlike other construction companies which saw a quarterly rebound in earnings, TRC suffered an operational loss which was dragged down by defect liability works for completed projects. Although, TRC has a sizable order book, billings from these projects have yet to contribute meaningfully, as they are still in the infant stages.
- LRT status… Delays in executing the LRT project remains the main culprit for the lacklustre performance.
- Looking forward… Overall, total outstanding order book remains sizable at ~RM1.34bn (see Figure #3), translating to ~3.4x FY11’s revenue and ~4.0x order book-to-market cap ratio.
- TP reduced by 2.8% to RM0.67 based on SOP valuation. We changed our valuation methodology from P/E multiple as a substantial portion of TRC’s valuation is made up of its net cash position.
Source: HLIB Research 1 March 2012
No comments:
Post a Comment