Journey to Wealth
Benalec - 1Q13 results within expectations
Period 1Q13/3M13
Actual vs. Expectations The 3M13 results came in within our expectations and that of the consensus. The 1Q13 net profit of RM23m accounted for 20% and 25% of ours and the consensus' full year FY13 forecasts respectively. There were no surprises in the reported earnings.
Dividends As expected, no dividend was declared during the quarter.
Key Result Highlights YoY, the 3M13 net profit of RM23m was lower than the previous year by 21%. The drop in net profit was in line with the lower revenue of 23% recognised during the quarter. The lower recognition was mainly due to the completion of a large proportion of the reclamation works in Melaka. There were no land sales during the quarter as the management is wrapping up some of the ongoing contracts in the near term.
QoQ, there were sequentially better earnings, which increased by slightly more than one-fold. The strong performance was mainly due to the higher recognition of its ongoing projects like Sentosa Cove, Glenmarie Cove and TNBF contract (TNB Fuel Sdn Bhd). In addition, the slower revenue recognition in 4Q12 was also attributable to the previous strong earnings jump in 1Q13.
Outlook We understand that management is currently working closely with some oil and gas majors to clinch partnership deals to develop its Johor reclamation land. We expect more news on this matter in early 2013. Moreover, the management is expected to clinch a parcel of land deal in Melaka in the near term.
Forecasts No changes to our FY13-14E earnings.
Rating Maintain OUTPEFORM
Maintain OUTPERFORM given the ample capital upside from the current price (+30%).
Valuation We are keeping our TP unchanged at RM1.71 based on SOP valuation.
Risks A slowdown in land sales (reclaimed lands) and prolonged EIA study result of its Johor land.
Source: Kenanga
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