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Bina Puri Holdings - OUTPERFORM - 14 JUNE 2012

kiasutrader
Publish date: Fri, 15 Jun 2012, 10:59 AM

News    Bina Puri has announced that its 80% indirect subsidiary, PT. Megapower Makmur had entered into an agreement with PT. PLN (Persero) of Wilayah Sulawesi Selatan, Sulawesi Tenggara Dan Sulawesi Barat to build and operate a mini hydro power plant with capacity of 4200 KW in South Sulawesi.

Comments   This is the sixth power plant concession secured by Bina Puri in Indonesia and it is the first hydro power plant project secured by the company. The construction will take 24 months to complete with an estimated cost of USD10m (RM31.8m).

 The tenure of the concession (PPA) is 15 years starting from the first year of its commercial operation i.e. 2014.

 Assuming a debt to equity of 80:20, Bina Puri will need to fork out about RM6.4m for its equity portion. As at 1Q12, its cash balance stood at RM64m, which is more than sufficient  finance the project's equity portion. 

 However, we are unable to gauge the expected IRR and earnings contribution from this to Bina Puri at this juncture, pending further guidance from management. However, any contribution will likely only be in 2014 onwards and we are not for now expecting any material contributions to group earnings in the near-term although we will be relooking at our forecasts again after speaking to management. 

 At present, Bina Puri is operating 5 coal power plants in Indonesia, which had been contributing about RM2.5m to its FY11 operating profit (around 7%). 

Outlook   Its current order book now stands at RM2.3b, which will last until FY15.

 Moving forward, Bina Puri is expanding its property earnings via the launches of a few property development projects in Klang Valley, Johor Bahru and Kota Kinabalu. The estimated GDV for these projects will be more than RM1.5b.

Forecast   No changes to our FY12E and FY13E earnings.

Rating  MAINTAIN OUTPERFORM
 An attractive upside of 43% to our TP of RM1.24.

Valuation    We maintain our Target price of RM1.24 with an unchanged 10x PER on FY12E EPS of 12.4sen.

Risks   Delays in construction projects.
Price escalation in raw materials and labour costs

Source: Kenanga 
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