Highlights

Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Fri, 18 Jan 2019, 09:53 AM

 

Eversendai Corporation - Bags First Win in 2019

Author:   |    Publish date:


SENDAI announced new contract wins secured by its group of companies in Singapore, India and Qatar collectively worth RM406m. Neutral on the wins. No change to FY18-19E earnings estimates. Maintain UNDERPERFORM with an unchanged TP of RM0.505 based on an unchanged valuation of 7.0x FY19E PER.

New contracts kick off 2019. Yesterday, SENDAI announced that its group of companies in Singapore, India and Qatar have secured new contracts worth a total of RM406m. In Singapore, it secured a hi-tech data processing and computing facility project while in India, it clinched a state-of-the-art secretariat-building project featuring two 45-storey towers. In Qatar, it won the grating support structure works for an arch along the Lusail Expressway.

Neutral on wins. We are neutral on these wins as they collectively falls within our FY19 replenishment assumption of RM1.6b. YTD, SENDAI’s replenishment stands at RM406m. Recall in FY18, SENDAI bagged RM1.44b worth of job exceeding our FY18 replenishment assumptions by RM241m, which we included into our FY19 replenishment of RM1.6b as bulk of the works will commence in 2019. As such, we have a remaining replenishment target of RM953m after accounting for this recent win of RM406m. Assuming an average PBT margin of 4% and a 36-month span for the contracts, the projects are expected to contribute c.RM5.2m per annum to the bottom-line.

Outlook. Currently, SENDAI’s outstanding order-book stands at c.RM2.5b, providing visibility for the next 1-1.5 years. We also note that it has received payment of USD36m for their first lift boat to VAHANA in 2Q18. We believe that it will not be long before SENDAI receives its remaining payment of USD54m and we expect its net gearing to come off to c.0.81x (from 1.06x as of 3Q18). We maintain our less upbeat outlook for now, as we continue to closely monitor and await the following catalysts; (i) more concrete signs of upbeat prospects for the construction sector and earnings delivery, (ii) higher order-book replenishments from SENDAI’s existing tender book of c.RM10.0b, and (iii) reduction in net gearing following the remaining payment of USD54m. Should the above developments take place, we may look to review our estimates.

No changes to earnings. We make no changes to our FY18-19E CNP as the contract wins fall within our replenishment assumptions.

Maintain UNDERPERFORM with an unchanged TP of RM0.505 based on an unchanged valuation of 7.0x FY19E PER, in line with our applied small-mid cap’s range of 6-11x. We pegged SENDAI towards the lower end of our valuation range given its: (i) extremely volatile earnings pattern, and (ii) thin margins for its India operations, and oil and gas segment.

Upside risks to our call include: (i) higher-than expected order-book replenishment, and (ii) better-than-expected margins.

Source: Kenanga Research - 11 Jan 2019

Share this
Labels: SENDAI

Related Stocks

Chart Stock Name Last Change Volume 
SENDAI 0.645 +0.01 (1.57%) 2,303,400 

  Be the first to like this.
 
Icon8888 this company good at securing contact but cannot make good money out of it
11/01/2019 09:37
qqq3 at this price...certainly not the worse in Bursa.....I rate it top 50 choice....not time yet but wait for results.....
11/01/2019 09:46
lksiam Yup, that's the problem of Sendai... Good orderbook but profit margin terrible even it is a international company.
11/01/2019 09:50


 

402  326  492  672 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 ARMADA 0.22+0.06 
 SAPNRG 0.285-0.005 
 SUMATEC 0.005-0.01 
 MYEG 1.01-0.06 
 BARAKAH 0.08+0.02 
 NEXGRAM 0.020.00 
 IRIS 0.15+0.005 
 XINGHE 0.045+0.005 
 KNM 0.09+0.01 
 ECONBHD 0.515+0.045 

TOP ARTICLES

1. 当遇上基本面投资法(下) 能赚钱就是好战略/冷眼 【冷眼专栏】漫漫投资路
2. 当遇上基本面投资法(上) “反向”战略非唱反调/冷眼 【冷眼专栏】漫漫投资路
3. Fear on Bumi Armada is probably overdone - felicity Good Articles to Share
4. THE PERCEPTION OF P/E or: How I learned to fear my Wife the bursa journey that worked for me. 2000-2019
5. Stocks on Radar - Elsoft Research (0090) AmInvest Research Reports
6. FPI FY19 revenue growth expected to hit 15% FPI 2大因素前景看好台灣聯友今年再 尋突破
7. Is QL Resources worth investing now? kcchongnz kcchongnz blog
8. [转贴]《东方华尔街》告诉你,炒家如何炒高一只股 Good Articles to Share
Partners & Brokers