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Signature International Bhd - Another Record Profit in 3QFY15

1year 100%
Publish date: Mon, 08 Jun 2015, 10:27 PM
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Review 
 Signature International’s (Signature) achieved another record profit in 
3QFY15, boosting the YTD core earnings to RM31.1mn. This was within 
our expectation and the cumulative earnings accounted for 76% of our fullyear forecast and 80% of consensus estimates. 
 Signature’s 9MFY15 earnings grew more than 200% YoY to RM31.1mn 
underpinned by higher project revenue and retail sales. PBT margin 
increased by 8.3%-pts to 20.1% due to economies of scale in 
production. 
 On a sequential basis, earnings grew 10.4% QoQ to RM13.4mn as 
project revenue surged as much as 24.6%. In this quarter, the project 
revenue continued to dominate the topline with 82% contribution. 
However, retail sales also improved by 16.8% QoQ with the slew of 
housing projects completions in 2014. 
 Trade receivables increased 69% to RM119mn in 3QFY15 vs. RM70.6mn in 
4QFY14. This was in line with higher project revenue, where collections 
will usually take 120-150 days. The long collection period also contributed 
to a general provision of RM5.7mn in 3QFY15 (RM1.2mn in 3QFY14), which 
the group can write back in the future. As far as cash was concerned, 
Signature managed to turn into a net cash position of RM5.7mn despite 
higher receivable as at Mar-15. This has prompted the company to declare 
its first ever interim dividend of 4sen/share in 3QFY15. 
 
 
Impact 
 No change to our FY15-18 earnings projections. 
 
 
Outlook 
 Project revenue to drive earnings higher. The quarterly project 
revenue topped RM70mn with current orderbook stood at RM154mn. 
According to management, the company expects some RM40mn jobs, 
which put out to tender in 2014, to be finalized and project awards to 
take place in 2H15. This will replenish the group’s outstanding 
orderbook to RM194mn, if the company manages to secure all the jobs. 
Meanwhile, the groups’ tender book stayed healthy at RM400mn. 
 Retail sales not affected much by GST. We are also upbeat with the 
strong retail sales performance. We understand from management 
that the company has raked in RM5mn sales during the recent 4-day 
HOMEDEC fair held at KLCC Convention Centre, which represents circa 
10% of annual sales (~38% of quarterly sales). Importantly, the strong 
sales are bucking the current weak property trend as well as consumer 
spending post GST implementation
 
 
http://www.bursamarketplace.com/index.php?ch=ch_themarket&pg=pg_tm_stocksss&ac=2742&sch=ch_stocks_research
SIGN (7246)
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