Investment Highlights

• We downgrade Enra to UNDERWEIGHT from HOLD with a revised fair value of RM1.38 (Exhibit 2) from RM1.85. We revised our FY19-21F net profit forecasts downwards by 41.6% 35.9% and 29.9% to RM5.9mil, RM6.6mil and RM7.3mil respectively by factoring in higher costs and interest expenses.

• Enra’s 1HFY19 net profit of RM1.7mil (-61.5% YoY) came in below our expectation, making up only 17% of our full-year forecast. For 2QFY18, Enra recorded a net loss of RM0.5mil mainly due to: 1) higher operating expenses; 2) interest expenses; 3) investment holdings and others costs; and 4) income tax.

• The energy services division recorded a lower PBT of RM2.2mil (-51.6% YoY, -73.9% QoQ) mainly due to lower sales and profit in chemical trading business. Nonetheless, this division will remain the leading revenue and earnings contributor to the group in FY19.

• The development of 93 Great Titchfield Street, London (75% stake, GDV of £11mil) is expected to be completed by December 2018 and so far, it has received booking for four units. This project will contribute positively to the bottom line as costs have mostly been incurred. Enra will continue its efforts to sell the remaining 8 residential units of Shamelin Star to realise profits.

• Enra's forward earnings will be driven largely by its US$48mil (RM210mil) 4-year contract (beginning April 2018) for the provision of condensate storing and offloading services for the Yetagun offshore gas field off the coast of Myanmar.

• Meanwhile, the group is also actively pursuing several property development opportunities in certain strategic locations in Malaysia and the United Kingdom.

Source: AmInvest Research - 30 Nov 2018