Investment Highlights

• We revised our FY19-21F net profit forecasts downwards by 16%, 42% and 4% respectively, reducing our FV by 8% to RM1.85 (from RM2.02) (Exhibit 1). We maintain our HOLD recommendation.

• Our earnings downgrade is largely to reflect slower sales in Shamelin Star, given the still subdued outlook for the local property market; a slight delay in the completion of its London project; and higher operating expenses.

• Enra has embarked on several ventures. In June 2018, Enra proposed the acquisition of International Chemicals Engineering Pty Ltd (ICE) for A$2.9mil (RM8.79 million). ICE is an Australian company involved in importing and distributing specialty chemicals in Australia and New Zealand. Based on its most recent audited financial statements, ICE generated a PAT of A$0.17mil for FY6/17. The acquisition is expected be completed in 2QFY19.

• Recall that Enra, through its 60% subsidiary, won a contract on 10 July 2017 from PC Myanmar (Hong Kong) Limited (PCML) to provide condensate storing and offloading services for the Yetagun offshore gas field off the coast of Myanmar. The US$48mil contract is for four years. The installation of the single-point mooring (SPM) system and storage tanker was completed on April 2018, hence, Enra will recognise revenue from this contract beginning FY19.

• The development of 93 Great Titchfield Street, London (75% stake, GDV of £11mil) is expected to be completed by September 2018 and so far it has received booking for two units. This project will contribute positively to the bottom line as costs have mostly been incurred. Meanwhile, ENRA will continue its efforts to sell the remaining 15 residential units of Shamelin Star to realise profits.

• Enra's forward earnings will be driven largely by: (1) 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; and (2) sales from its remaining 15 units in Shamelin Star and its one-off property project in London. Meanwhile the proposed land reclamation project in Labuan is still a long way to go and will not have significant contribution to the group’s bottom line over the short to medium term.

Source: AmInvest Research - 9 Aug 2018