Journey to Wealth
TRC Synergy - Recovery On Track
THE BUZZ
TRC announced that it has secured a new project from Jabatan Kerja Raya Sarawak to construct a public access road from Sangan to Kapit for a contract sum of RM169.9m. This work package is part of the Sarawak Corridor of Renewable Energy (SCORE) infrastructure development project.
THE TAKE
Off to a great start. This is TRC's first job win in 2013 after the company secured more than RM970m worth of jobs in 2012. We deem it within our expectations, with our FY13 orderbook replenishment target remaining unchanged at RM500m. With the company's outstanding orderbook now totaling about RM2.0bn, the jobs in hand may last it well into 2HFY14, assuming a quarterly burn rate of RM200m-RM250m. More specifically, by award per se, the latest contract is TRC's second one associated with the SCORE region. As such, we do not discount the possibility of it securing more, as management has made known its intention to expand its footprint in the said area.
Earnings likely to improve. As the prolonged delay at TRC's RM950m LRT extension project has been resolved, we believe the company's stock may likely see an earnings re-rating over the next few quarters. We are reaffirming our FY13 and FY14 net profit forecasts of RM38.9m and RM45.4m respectively.
TRADING BUY. All in, we are positive on the job wins and believe that TRC's share price may be in for a major re-rating as its earnings over the next few quarters improve substantially now that its LRT extension project is gaining pace. Given its sturdy outstanding orderbook of close to RM2bn and with proper execution, we foresee a near-term rebound in its share price, which declined by 10.9% in 2012. Maintain TRADING BUY, with our FV unchanged at RM0.83, based on a 10x FY13 PE.
Source: OSK
TRC announced that it has secured a new project from Jabatan Kerja Raya Sarawak to construct a public access road from Sangan to Kapit for a contract sum of RM169.9m. This work package is part of the Sarawak Corridor of Renewable Energy (SCORE) infrastructure development project.
THE TAKE
Off to a great start. This is TRC's first job win in 2013 after the company secured more than RM970m worth of jobs in 2012. We deem it within our expectations, with our FY13 orderbook replenishment target remaining unchanged at RM500m. With the company's outstanding orderbook now totaling about RM2.0bn, the jobs in hand may last it well into 2HFY14, assuming a quarterly burn rate of RM200m-RM250m. More specifically, by award per se, the latest contract is TRC's second one associated with the SCORE region. As such, we do not discount the possibility of it securing more, as management has made known its intention to expand its footprint in the said area.
Earnings likely to improve. As the prolonged delay at TRC's RM950m LRT extension project has been resolved, we believe the company's stock may likely see an earnings re-rating over the next few quarters. We are reaffirming our FY13 and FY14 net profit forecasts of RM38.9m and RM45.4m respectively.
TRADING BUY. All in, we are positive on the job wins and believe that TRC's share price may be in for a major re-rating as its earnings over the next few quarters improve substantially now that its LRT extension project is gaining pace. Given its sturdy outstanding orderbook of close to RM2bn and with proper execution, we foresee a near-term rebound in its share price, which declined by 10.9% in 2012. Maintain TRADING BUY, with our FV unchanged at RM0.83, based on a 10x FY13 PE.
Source: OSK
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