Journey to Wealth
Benalec - 2Q13 results within expectations
Period 2Q13/1H13
Actual vs. Expectations 1H13 net profit of RM44m came in at 39% and 43% of our FY13 full year forecast and consensus, respectively. The results are deemed inline as there are pending land sale to be transacted in the 2HFY13.
Dividends As expected, no dividend declared during the quarter.
Key Result Highlights 1H13 core net profit was down by 24% despite 22% increase in revenue. The higher revenue was attributed to the completion of a few projects in Melaka and the progress billings for the new project in Klang ie: Pulau Indah and Swiss Horizon. The lower net profit was due to the absence of land sale during the period, 1H13.
Sequentially, the net profit the net profit reduced by 7% due to additional maintenance cost for its vessels. Meanwhile, the revenue was up by 15% as the Benalec recognised a big chunk of the billings from the Sentosacove project i.e. projet completion.
YoY, due to the absence of land sale in 1H13, the net profit drop by 27% despite higher revenue recognised during the quarter. However, with the additional land sale coming in by 2H13, we expect the profit from the land sale to surpass the last year's level of RM27m.
Outlook The execution of Johor land development is the next re-rating for Benalec due to the land's attractiveness as compared to its Melaka land. We understand that the Management has identified the off-taker and it is waiting on the sideline to JV with Benalec. To date, the EIA report is yet to be finalised. We expect Benalec towrap up with the necessary approval in 2HCY13.
Forecasts No changes in our FY13-14E earnings.
Rating Maintain OUTPEFORM
Maintain OUTPERFORM given the ample capital upside from the current price (+45%).
Valuation We keep our TP unchanged at RM1.71 based on SoP valuation.
Risks Slowdown in land sales and prolonged EIA study results of its Johor land.
Source: Kenanga
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