Ikhmas posted mix set of results as its 4QFY earnings rose 36% yoy but fell 82% qoq. The outperformance yoy was on the back of a record job recognition while lower qoq was on the absence of sale of fixed assets and higher input costs which led to lower margins.
FY17 earnings only made up 51%/47% of ours and consensus’ estimates amidst unavoidable delays on project finalization and additional cost from one infrastructure project albeit strongest job recognition so far.
Following detrimental execution risk, we pared down FY18/FY19 earnings by 7%/3% respectively as we expect higher risk on project delay and persistent margin pressure from input cost. Its current orderbook is c.RM600m which provides earnings visibility of up to 2 years. Its most recent job win is valued at RM38.5m on LRT3 GS01 package from Mudajaya.
We maintain HOLD on the stock with a RM0.51 TP (from RM0.65), after applying a 15% discount to the average subsector piling PE multiple as well as based on its enlarged share base arising from private placement. The discount reflects its weak balance sheet and working capital concerns. Nevertheless, we believe the subsector could be in for a robust FY18 outlook as most LRT3 and MRT2 job packages has been awarded.
Source: BIMB Securities Research - 1 Mar 2018
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Created by kltrader | Aug 19, 2024
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Created by kltrader | Aug 12, 2024