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Author: kltrader   |   Latest post: Mon, 2 Dec 2019, 5:17 PM

 

Destini Bhd - Results Below Expectation

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2QFY19 core net profit declined 86.1% yoy and 59.8% qoq

Destini’s 2QFY19 revenue and core net profit (after adjusting for fair value adjustment on investment in securities) declined by 69.8% and 86.1% yoy. Qoq, revenue and core net profit declined by 46.7% and 59.8%. Key contributing factors were lower contributions from aviation manufacturing services and MRO (maintenance, repairs and overhaul) services as well as less order for aviation services and the completion of several marine manufacturing services.

6MFY19 revenue and core net profit declined by 54.8% and 75.7%

For the first half of FY19, revenue and core net profit declined by 54.8% and 75.7% respectively mainly due to less order for aviation services and the completion of several marine manufacturing services. The board has not recommended any dividend for the period (6MFY18: nil).

FY19F and FY20F core net profit forecasts cut by 28.9% and 9.8%

Destini has been awarded contracts to provide tubular running and handling and related oil & gas services by Carigali-PTTEPI Operating Company Sdn Bhd, Sarawak Shell Berhad and Petrofac (Malaysia-PM304) Ltd. A 50:50 JV has also entered into an aircraft safety equipment maintenance support agreement with Malindo Airways Sdn Bhd and Thai Lion Mentari Co Ltd. However, pending increased government spending on MRO, naval and aviation services for the security agencies as well as rail related projects, we are cutting our FY19F and FY20F revenue forecasts by 18.2% and 12.8% respectively, resulting in cuts of 28.9% and 9.8% in our core net profit forecasts. Previously forecasting 1.0 sen per share, we now do not expect any dividend in FY19F.

Pegged at 17.1x revised FY20F EPS, TP cut to RM0.28

Pegging the revised FY20F core EPS forecast of 1.6 sen (1.8 sen previously) to an unchanged target PE of 17.1x, target price for Destini is cut from RM0.31 to RM0.28. Dividend forecast for FY20F remains unchanged at 1.0 sen.

Maintain BUY rating

Destini’s management expect the operating environment to remain challenging and competitive. But we believe the share price has found a floor and is well backed by a net asset per share of RM0.44 and NTA of RM0.26 per share. Destini is one of the few local companies with proven capability and a reputation for timely delivery of services at competitive pricing in aviation manufacturing, MRO services, building of OPVs and NGPCs, and O&G decommissioning services and fabrication. We maintain our BUY rating for the stock.

Source: Mercury Research - 3 Sept 2019

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Labels: DESTINI

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Chart Stock Name Last Change Volume 
DESTINI 0.215 -0.005 (2.27%) 1,956,500 

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