Investment Highlights

• We cut our FY19-20F net profit forecasts by 47% and 38%, reduce our FV by 18% to RM2.02 (from RM2.45) (Exhibit 2), but maintain our HOLD call.

• Enra’s FY18 results disappointed both our forecast and consensus estimates. It dipped into the red with a net loss of RM2.2mil (excluding discontinued operations), vs. our forecast and consensus estimates of RM14.7mil. The key variance against our forecast came from the delay in the completion and hence marketability of its property project at 93 Great Titchfield Street in London – four residential units with a GDV of £11mil (RM58mil) (Exhibit 3).

• FY18 turnover plunged 58% YoY while the bottom line turned into a net loss of RM2.2mil from a net profit of RM11.9mil a year ago largely due to: (1) lower sales from property project Shamelin Star in Cheras of only 11 units vs. 70 units a year ago; and (2) lower progress billings from the oil & gas fabrication business as the key contract was already at the tail-end.

• Our earnings downgrade is largely to reflect the reduced chances of Enra being able to identify and embark on new property projects, given the still subdued outlook for the local property market.

• Enra's forward earnings will be driven largely by: (1) sales from its remaining 16 units in Shamelin Star and its smallish and one-off property project in London; and (2) its US$48mil (RM210mil) 4-year contract for the provision of condensate storing and offloading services for the Yetagun offshore gas filed off the coast of Myanmar. 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 - 31 May 2018