Journey to Wealth
Benelac Holdings - Step by step Buy
- Maintain BUY on Benalec Holdings, with our sum-of-parts (SOP) derived fair value lowered slightly to RM2.48/share (previously: RM2.51/share) ' as we roll forward our valuation base to FY13F.
- Benalec reported 4QFY12 net profit of RM11mil, bringing FY12F core net profit to RM83mil. Its results were largely within expectations.
- Stripping off a RM6mil gain from the bargain purchase of subsidiaries acquired in the previous financial year, FY12 core net profit shed 8% YoY on:- (i) timing issues for ongoing construction jobs/recognition of land sales at its Malacca concessions; and (ii) one-off ESOS expenses totalling RM2mil during the financial year; and (iii) preliminary expenses for its future ventures in Johor.
- But, we forecast a turnaround in FY13F core earnings (+13% YoY; FY12: -8% YoY). This would be mainly underpinned by a step-up in recognition from three key projects: (i) DMDI land in Kota Laksamana, Malacca (ii) Pulai Indah Industrial Park, Selangor; and (iii) RM67milfreight contract to carry coal for TNB.
- The latest contract (3 years + option for another 2 years) that commenced last May adds another dimension to Benalec's expanding capabilities via recurring charter income from TNB.
- Benalec's has built up a healthy order book buffer of RM561mil (~2x construction revenue) that would provide earnings visibility until 2016.
- But, the real beef with Benalec largely hinges on its pursuit to seal a formal mandate to develop a maritime industrial park in South Johor ' strategically located in close proximity to Singapore. We expect maiden contributions from Johor to start channelling-in from 4QFY13 onwards.
- Benalec's cash balance remains healthy with FY13F net gearing at only 0.1x, suggesting ample room to gear up for future value-accretive deals ' notably in Johor. To kick start its Johor ventures, we understand that the group is planning to raise ~RM100mil in borrowings.
- Forward valuations remain attractive at FY13F-15F FD EPS of 7x-10x against robust EPS CAGR of 16%. Our forecast only assumes land reclamation works for Phase 1& 2 of its Tg.Piai landbank in Johor (2,000 acres) ' implying more upside to its future valuation upon contract delivery.
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CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
KC Loh
how they got 2.48 in 2013 is beyond me. i only got 1.33
2012-08-30 12:45