Investment Highlights

• We maintain our forecasts, FV of RM2.45 (Exhibit 2) and HOLD call.

• Enra’s 1HFY18 net profit (excluding discontinued operations) came in at only 22% and 23% of our full-year forecast and full-year consensus estimates. However, we consider the results within expectations as we expect a stronger 2HFY18 with higher property sales in Malaysia, billings from the property project in London and the growing oil & gas division.

• 1HFY18 turnover plunged 47% YoY largely due to lower property sales in Malaysia, partially offset by a slightly better top-line performance from the oil & gas division on higher sales of chemical products and improved billings from fabrication contracts.

• However, 1HFY18 net profit only eased 1% YoY, as higher oil & gas profits and "derecognition of contingent consideration payable" amounting to RM4.1mil in relation to the acquisition of Enra Engineering and Fabrication Sdn Bhd, cushioned lower property profits and higher headquarters' expenses.

• The prospects for Enra's oil & gas division are bright, underpinned by organic growth at its existing businesses, as well as new ventures such as the singlepoint mooring contract it recently won in Myanmar.

• However, Enra still has much to do to improve the sustainability of its property earnings. Enra needs to look for new land parcels with fast turnaround times to fill the vacuum left by its completed Shamelin Star high-rise residential project in Malaysia, as well as soon-to-becompleted development in London. Its proposed land reclamation project in Labuan is unlikely to contribute significantly to the bottom line over the short to medium term.

Source: AmInvest Research - 24 Nov 2017