Background

Faber Group Bhd ('Faber') is an investment holding company, with subsidiaries involved in:
1) the provision of facilities management services to hospitals, and commercial and residential properties in public and private sectors in Malaysia, India, and the United Arab Emirates.
2) the provision of biomedical engineering maintenance, cleansing, clinical waste management, facility engineering maintenance, linen and laundry, and maintenance management information system services.
3) the development of residential and commercial properties.

Recent Financial Results

Faber announced a very good set of results for FYE31/12/2009, For QE31/12/2009, Faber's net profit increased by 124% q-o-q or 138% y-o-y to RM42.6 million while its turnover increased by 54% q-o-q or 106% y-o-y to RM304 million. The improved performance is attributable to an increase revenue from the Integrated Facilities Management division (which jumped from RM132 million for QE31/12/2008 to RM255 million for QE31/12/2009). The improvement came from business expansion in UAE as well as higher variation order, higher bed occupancy rate and additional new facilities at government hospitals with the concession area.


Table 1: Faber's 8 quarterly results


Chart 1: Faber's 12 quarterly results

Valuation

Faber (closed at RM1.66 on Feb 25) is now trading at a PER of 3.5 times (based on annualizing the 4Q2009 EPS of 11.73 sen). If we discount the full-year EPS by 30%, we would get an EPS of 33 sen; giving Faber a PER of 5.0 times. At these multiples, I believe Faber is fairly attractive. Its fair value could be as high as RM3.30 (based on PER of 10 times the discounted annualized EPS of 33 sen).

Technical Outlook

Faber is in an uptrend, with immediate horizontal resistance at about RM1.80 (see Chart 2). If it can surpass this level, its next horizontal resistance is at RM2.30-40 (see Chart 3).


Chart 2: Faber's weekly chart as at Feb 22, 2010 (Source: Tradesignum)


Chart 3: Faber's monthly chart as at Feb 22, 2010 (Source: Tradesignum)

Conclusion

Based on strong financial performance, attractive valuation & positive technical outlook, Faber could be a good stock for long-term investment.