• We initiate our coverage on Enra Group (Enra) with a HOLD recommendation and a fair value of RM2.45 per share, based on sum-of parts (SOP) valuation.
• Incorporated in Malaysia in 1992 under the name of Orlando Holdings Bhd, the company was listed on the Second Board of Bursa Malaysia on 28 December 1992. In 2000, the company changed its name to Formis (Malaysia) Bhd before being transferred to the Main Board of Bursa Malaysia on 30 March 2000. It then assumed the name of Perduren (M) Bhd on 19 September 2006

• The company was taken over by Datuk Kamaluddin Abdullah and Datuk Mazlin Md Junid in February 2015, and the company changed its name to Enra Group Bhd. Post-acquisition, the company has realigned its business direction, with its current focus on property development and oil and gas sectors. It appointed a new management team and board of directors in June 2015

• With the realignment of its business strategy, it started to divest its non-core businesses, and in July 2015, completed the sales of several non-core businesses, namely investment holding, hotel management and car park operations. In May 2017, it announced the disposal of its remaining investment properties.

• In May 2015, Enra ventured into its maiden property development project in London, United Kingdom. This was followed by its foray into the oil and gas sector In September 2015 through Enra Kimia Sdn Bhd.

• We expect Enra to sustain its growth moving forward driven by a highly capable management team. We project Enra’s core net profit to grow by 22% and 55% YoY in FY18 and FY19 respectively driven by: 1) ongoing property development projects in Shamelin Star, Cheras, KL and 93, Titchfield Street, London; 2) steady income in its existing oil and gas business; and 3) new contributions from its new oil & gas single-point mooring system contract it recently won in Myanmar.

• We expect the property development and oil & gas divisions to remain the key drivers of Enra’s earnings in the next few years. In FY18, we forecast property development to contribute 57% of revenue and 63% of overall pre-tax profit, with oil & gas making up 43% of revenue and 37% of pre-tax profit.

• We also expect Enra to remain flexible in its structure to continue exploring opportunities in other business segments, highlighted by its tie-up with Emrail on railrelated contracts.

Source: AmInvest Research - 14 Jul 2017