Journey to Wealth
Puncak Niaga - 2Q12 results within expectations
Period 2Q12/1H12
Actual vs. Expectations
2Q12 results came in within ours and the consensus expectations.
1H12 net profit of RM147m made up 57% and 56% of our full year FY12 and the consensus' forecasts respectively.
Dividends No dividend was declared during the quarter.
Key Result Highlights
1H12 revenue increased by 59% to RM1.7b and its bottom line turned to a profit of RM146m from a loss of RM4m recorded in 1H11. This was mainly due to higher water tariffs (+25%) and additional contributions from its oil and gas and construction division.
QoQ, the net profit increased by 15% due to EBIT margin improvement across all the division i.e. water (29%), oil and gas (15%) and construction (18%). However, its water treatment division profits fell by 19% to 82.2m (from RM101.9m) due to higher operating expenses.
YoY, net profit surged from RM4m to RM78m on the back of a 83% jump in revenue. This was mainly due to additional contribution from its oil and gas and construction divisions. To recap, Puncak acquired its oil and gas subsidiaries and secured rural water projects in Sarawak worth RM667m in 2H11.
Outlook YTD, its oil and gas division chalked up RM286m in revenue and we reckon that it will be able to achieve at least RM500m in revenue in FY12.
The rural water project in Sarawak is slated for completion by end of FY12 while we also do not discount the fact that Puncak could win more water projects in East Malaysia.
Change to Forecasts
No changes in our FY12-13E forecasts.
Rating MAINTAIN OUTPEFORM
Maintain OUTPEFORM recommendation as we believe that Puncak will be the best pick for the upcoming election theme.
Valuation We are keeping our target price unchanged at RM3.01 based on SOP valuation.
Risks Lower than expected takeover price for its water concession (below RM2.61) as the second offer from Selangor State Government is at c. RM2.71 per share.
Source: Kenanga
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