TRC Synergy (HOLD)

• FY11 PATAMI contracted by 16% to RM13.5m (2.91 sen/share), making uponly 84% and 85% of HLIB and consensus expectations respectively.
• Ending on a limp' Unlike otherconstruction companies which saw a quarterly rebound in earnings, TRC sufferedan operational loss which was dragged down by defect liability works forcompleted projects. Although, TRC has a sizable order book, billings from theseprojects have yet to contribute meaningfully, as they are still in the infantstages.
• LRT status' Delays in executingthe LRT project remains the main culprit for the lacklustre performance.
• Looking forward' Overall, totaloutstanding order book remains sizable at ~RM1.34bn (see Figure #3),translating to ~3.4x FY11's revenue and ~4.0x order book-to-market cap ratio.
• TP reduced by 2.8% to RM0.67 based on SOP valuation. We changed ourvaluation methodology from P/E multiple as a substantial portion of TRC'svaluation is made up of its net cash position.