Investment Highlights

• We maintain our HOLD recommendation on Enra with an unchanged fair value of RM1.25 (Exhibit 2). We made no changes to our FY20–22F earnings forecasts.

• We raise our FY20 net profit forecasts by 32% by cutting investment holding costs following a stronger-thanexpected 9MFY20 earnings.

• Enra’s 9MFY20 net profit of RM2.8mil (+434% YoY) came in above our expectation, making up 180% of our full-year forecast. Revenue grew by 5.7% YoY contributed by RM42mil from the property development division. The stronger-than-expected earnings was mainly due to huge reduction in investment holding costs by 47%.

• The energy services division posted a lower PBT of RM12.6mil (-18.9% YoY) mainly due to lower revenue.

• On the property development division, Enra has sold all completed units in London, the UK. With cash proceeds of more than RM30mil, Enra is in a good position to grow its core energy services business while embarking on niche and quick-turnaround property development projects focusing on affordable landed properties in established townships in the Klang Valley.

• The acquisition of a 15-year-old oil and chemical tanker for US$9.3mil or RM38.9mil cash has been completed in January 2020. This acquisition is in line with the group’s strategy to expand its offshore services and enhance its capabilities in offshore oil and gas operations. With a net tonnage of 10,216 tonnes, the double-hull oil and chemical tanker will provide cost-effective storage and offloading solutions to oil and gas fields. This will enhance Enra’s competitiveness in pursuing new contracts in this core business area. Enra also acquired a buoy for RM14.6mil in February 2020. These assets will be deployed to Myanmar to service Enra’s contract with PC Myanmar (HK) Ltd.

• Enra's forward earnings will be driven largely by: (i) 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; and (ii) the retirement home development in Caldecott Square, Rugby, the UK.

Source: AmInvest Research - 27 Feb 2020