Period    3Q12/9M12

Actual vs.  Expectations    The 3Q12 results came in within expectations. The 9M12 net profit of RM52m made up 70% and 72% of ours and the consensus' full year FY12 forecasts respectively.

Dividends  No dividend was declared during the quarter.

Key Result Highlights   The 9M12 net profit increased by 8% on the back of a higher revenue figure of 14%. The revenue from its crane division grew by 73% due to the higher deliveries of the cranes. The crane's pretax profit margin profit remained unchanged at 11%. The construction and concession revenue meanwhile grew by 43% as more progress billings were billed for its ongoing projects. The concession business pre-tax profit jumped by 37% due to the positive contribution from Cambodia Airport. 

 QoQ, the revenue fell by 7%  due to a lower shipyard business contribution (-21%). However, the net profit increased by 26% thanks to a strong revenue contribution from its construction division (+34%) coupled with a pre-tax profit margin improvement from 1% to 5%.     

 YoY, the 3Q12 net profit came in higher by 10%, which is in line with the increase in the revenue. The construction division remained as the main earnings contributor with a 77% increase in revenue amidst an improvement in margin. Its crane division also grew strongly with 78% increase in revenue as more cranes were delivered during the period. 

Outlook   Its current order book stands at RM2.2b, comprising of RM1.4b (or 64% of the total) from construction, RM746m (34%) from the crane division and RM61m (2%) from its shipyard business. This will last the company for the next two to three years.  

Change to Forecasts    No changes in our FY12-13E forecasts.  

Rating  Maintain MARKET PERFORM

 We are maintaining our MARKET PERFORM recommendation due to the limited capital upside to our TP and continued uncertainties in the APH issue.  

Valuation    No changes to our TP of RM0.83 based on SOP valuation.

Risks   Lower recoverable amount from APH and further provision for the receivables.

Source: Kenanga