Investment Highlights

• We maintain our UNDERWEIGHT recommendation on Enra with a revised fair value of RM1.20 (Exhibit 2) from RM1.38 following an earnings revision. We cut our FY19– 21F net profit forecasts by 45.7% 29.9% and 21.7% to RM3.2mil, RM4.6mil and RM5.7mil respectively after factoring in higher finance expenses and investment holding costs.

• Enra’s 9MFY19 net profit of RM0.5mil (-61.5% YoY) came in below our expectation, making up only 8.5% of our full-year forecast. For 3QFY18, Enra recorded a net loss of RM1.2mil mainly due to: 1) higher operating expenses; 2) interest expenses; 3) investment holdings and others costs; and 4) income tax.

• For 9MFY19, the energy services division posted a higher PBT of RM12.3mil (+45.4% YoY) mainly due to: (i) the maiden 5-month contribution from the newly acquired Australian subsidiary; and (ii) the first 8-month contribution from the Myanmar gas condensate storing and offloading facility and services. The property development segment recorded its 9MFY19 revenue and net profit of RM2.9mil and RM1.3mil respectively, contributed by sales of Shamelin Star units. Nonetheless, investment holding and others division registered a 9MFY19 net loss of RM13.1mil, hence dragging down the group’s total profit to RM0.5mil.

• The development of 93 Great Titchfield Street, London (75% stake, GDV of £11mil) has been completed in December 2018. The group expects the sale of its first unit to be recorded in 4QFY19. This project will contribute positively to the bottom line as costs have mostly been incurred. Enra will continue its efforts to sell the remaining 9 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 to the Yetagun offshore gas field, off the coast of Myanmar.

• Meanwhile, the group is currently assessing several oil & gas related development options to realise values in its 60 acres Labuan land; and actively evaluating 2 property development projects in the state of Selangor.

Source: AmInvest Research - 25 Feb 2019