Investment Highlights

• We maintain our forecasts, FV of RM2.46 (Exhibit 2) and HOLD call.

• Enra reported only RM0.8mil net profit for 9MFY18 vs. our full-year forecast of RM14.5mil and full-year consensus estimates of RM14.7mil. However, we consider the results within expectations as we expect a bumper 4QFY18 as Enra said that it is "committed to complete the sale of its remaining unsold units in Shamelin Star (24 units) and Portland Chambers in London (total GDV of RM57mil) for the remainder of FY18".

• 9MFY18 turnover fell 62% YoY largely due to lower property sales from Shamelin Star (only nine units vs. 66 units during the corresponding period a year ago), coupled with weaker topline performance from the oil & gas division (chemical products and oil & gas fabrication contracts).

• 9MFY18 net profit plunged 94% 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, were offset by 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 time to fill the vacuum left by its completed Shamelin Star high-rise residential project in Malaysia, as well as completing development in London. Its proposed land reclamation project in Labuan is unlikely to contribute significantly to the bottomline over the short to medium term.

Source: AmInvest Research - 1 Mar 2018