Journey to Wealth
Benalec - 4Q12 results within expectations
Period 4Q12/12M12
Actual vs. Expectations
4Q12 results came in within our expectations and that of the consensus. The 12M12 net profit of RM83m also came in within our full year expectations and the consensus at 97% and 94% respectively.
Dividends No dividend was declared during the quarter.
Key Result Highlights
FY12 revenue and net profit dropped by 28% and 14% respectively. This was due mainly to the slower recognition for the sale of one parcel of land in Melaka which Benalec had already recognised its reclamation cost in the books. The transaction is, however, expected to be recognised in FY13. For the year, Benalec chalked up a RM68m gain from its reclaimed land sales.
QoQ, the net profit fell by 24% on the back of a 14% drop in revenue. This was mainly due to lesser construction revenue recognised and the absence of land sales during the quarter.
YoY, the revenue and net profit declined by 62% and 53% respectively due to slower recognition of construction works and also the Melaka land sale.
Outlook We understand that management is currently working closely with oil and gas majors to clinch partnership deals to develop its Johor reclamation land. We expect more news on this matter in the near term.
We also understand that the EIA study for the Johor land development will be wrapped up by the end of this year.
Nonetheless, we have toned down our bullish estimate on the order book replenishment for FY13 from RM300m to RM150m as we are now assuming a longer take-up time for its land reclamation works in Johor (Tanjung Piai).
Forecasts We have revised down our FY13E earnings by 14% as we assumed a lower order book replenishment of RM150m. We are also introducing our FY14E earnings of RM131m with an order book replenishment assumption of RM200m.
Rating Maintain OUTPERFORM
Maintain OUTPERFORM given the ample capital upside from the current price (+75%) and its positive Johor land development prospect.
Valuation We have cut our TP to RM1.81 from RM2.37, based on SOP valuation.
Risks Slowdown in land sales (reclaimed lands).
Source: Kenanga
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