Result

• Boilermech Holdings Berhad (Boilermech) posted a net profit of RM6.1m during last quarter of FY20, which improved 7.2% qoq but slumped 41.0% yoy. On the same note, revenue stood at RM59.8m which increased 12.7% qoq but slid 17.2% yoy.

• As for FY20, the Group registered net profit and revenue of RM23.3m and RM230.1m, tumbling 12.5% yoy and 2.0% yoy respectively. The disappointing results were dented by subdued project delivery from both Bio-energy and Water treatment divisions coupled with lower trading sales from the Water treatment division.

• Within in-house estimates. The Group’s 12MFY20 net profit of RM23.3m is within our estimate (95.9%) but slightly below market expectation (92.1% of full year net earnings forecast).

Comment

• Higher project delivery lifted QoQ earnings. Boilermech registered a higher revenue during 4QFY20 up 12.7% qoq, thanks to massive project delivery from both Bio energy and Water treatment divisions (revenue up 4.5% qoq and 71.4% qoq respectively). Besides, PBT also soared 12.9% qoq, underpinned by better margin from the Water treatment divison (+9.3ppts) despite disappointing margin posted by the Bio-energy division (-1.0ppts).

• Subdued YoY performance deteriorated by sluggish earnings from both Bio-energy and Water treatment divisions. The Group’s revenue and PBT slipped 17.2% yoy and 39.2% yoy respectively in view of lower project delivery from both segments. Revenue for Bio-energy division as well as Water treatment division slumped 17.7% yoy and 14.9% yoy respectively on the back of slumbering PBT which tumbled 37.1% yoy and 48.7% yoy respectively (led to PBT margin dropped -4.7ppts and -7.5ppts).

• Lower orderbook secured during FY20 weighed down overall FY20 earnings. Cumulatively, Boilermech’s revenue and PBT decelerated by 2.0% yoy and 11.4% yoy respectively in view of fewer contribution from Bio-energy division [revenue growth was flat at RM196.2m (vs FY19: RM196.1m); PBT:-7.3% yoy], coupled with subdued Water treatment division (revenue and PBT down 12.2% yoy and 41.0% yoy respectively).

Source: JF Apex Securities Research - 26 Jun 2020