Results

• 4QFY14 results came in with revenue of RM135.8m (+10% YoY, -7% QoQ) and PATMI of RM16.1m (+20% YoY, +23% QoQ).

• For the full year FY14, PATMI came in at RM53.7m, representing a 114% YoY growth on a core basis (i.e. after stripping out RM4.2m disposal gains on non-core assets recorded in 3Q last year).

Deviation

• Full year FY14 PATMI was within expectations (i.e. +4.6% above our forecast).

Dividends

• 5 sen first and final dividend was proposed in relation for the year FY14 (FY13: 2 sen), above our forecast of 3.9 sen.

Highlights

• Construction progressing well. Construction revenue jumped 72% YoY, fuelled by contributions from key jobs such as the LRT stations, MACC Headquarters and Symphony Hills. Construction EBIT margin also expanded YoY from 6.7% to 10.3% as newer jobs, which command higher margins, took a larger contributing share.

• Orderbook at an all-time high. New job wins hit a record high of RM1.1bn in FY14 (FY13: RM501m). Mitrajaya has also started the year well with RM230m in new job wins YTD, hitting 46% of our full year target. Its orderbook currently stands at RM1.9bn, implying a superior 5.1x cover on FY14 construction revenue.

• Softening property sales for 2nd Phase. Mitrajaya launched Phase 2 (RM200m) of its Wangsa 9 Residence in Dec and has seen take up rate of only slightly above 10% (as of end Jan). Nonetheless, we are not entirely concerned by this as Phase 1 (RM200m) which was launched in Oct has hit 70-80% take up rate.

Risks

• Delays in construction execution and softening property market.

Forecasts

• No changes to estimates as the results were inline.
• We maintain our FY15 and FY16 PATMI forecast of RM77.7m and RM93.3m, translating to 45% and 20% YoY growth respectively.

Rating

BUY, TP: RM1.97

• We continue to highlight Mitrajaya as our top small cap construction pick given its strong earnings visibility backed by its sizable orderbook.

Valuation

• Our TP is still based on an unchanged 10x P/E on FY15 earnings. The stock currently trades at 8.5x and 7.1x FY15- 16 P/E with dividend yield of 3.5% and 4.3%.

Source: Hong Leong Investment Bank Research - 25 Feb 2015