Rohas’s FY21 core loss of -RM2.1m were better than expected due to stronger associates contribution. Going forward, management is expecting a better year aided by the Jendela rollout but expects profit contribution to be sluggish until later in 2022. Its associates in Vietnam and Indonesia could also provide stronger earnings contribution this year. Maintain forecasts. Maintain HOLD with unchanged TP of RM0.29 after pegging FY22 EPS to 9x P/E multiple.

Above expectations. Rohas reported 4QFY21 results with revenue of RM61.4m (+19.4% QoQ, -39.3% YoY) and core PATAMI of RM6.4m (against core LATAMI of -RM4.2m in 3QFY21, core LATAMI of -RM1.7m in 4QFY20). This brings FY21 to a narrower core LATAMI of -RM2.1m (against core LATAMI of -RM2.8m in FY20). Results were above our expectations as we had projected core LATAMI of -RM6.0m for FY21. Note that we have adjusted FY21 numbers for RM2.6m gain on disposal of a 10% stake in its Vietnam water associate and RM12.1 impairment of receivables.

Dividends. No Dividends Were Declared.

Deviations. Earnings beat on higher than expected contribution from associates.

QoQ. Performance returned to the black driven by increase in revenue of 19.4% resulting from higher contribution of its tower divisions with power transmission tower deliveries making up most of the recovery.

YoY. Rohas climbed back into profit territory buoyed by stronger contribution from its associates, as its Lawe Sikap mini-hydro benefitted from unusually heavy rainfall in 4QFY21 as well as adoption of different accounting standards.

YTD. FY21’s core LATAMI narrowed YoY to -RM2.1m (vs -RM2.8m in FY20) despite a -34% decline in revenue. This is mainly due to stronger contribution from associates in FY21 due to unusually heavy rainfall benefitting its mini-hydro and adoption of different accounting standard which spreads out profit throughout the concession period.

Outlook. Estimated outstanding orderbook for EPCC segment stands at c.RM350m which translates into 2.1x cover ratio of FY21 EPCC revenue (low base). Tower fabrication orderbook stands at about c.RM80m, representing c.2x cover ratio on FY21 tower fabrication revenue. Going forward, management is expecting a better year aided by the Jendela rollout but expects profit contribution to be sluggish until later in 2022. Its associates in Vietnam and Indonesia could also provide stronger earnings contribution this year.

Forecast. Maintained.

Maintain HOLD, TP: RM0.29. Maintain HOLD with unchanged TP of RM0.29. Our TP is derived by pegging FY22 EPS to 9x P/E multiple. Key upside risks: pick up in contract flows and quicker than expected normalisation. Downside risks include higher steel prices, labour shortages and execution risks.

Source: Hong Leong Investment Bank Research - 1 Mar 2022