Period  4Q13/FY13

Actual vs. Expectations 4Q13 net profit of RM10.6m brought FY13 net profit to RM41.1m. This outperformed expectations, at 8.2% and 7.6% above our (RM38.0m) and consensus (RM38.2m) forecasts respectively.

 The key variance to our forecasts is the better-than expected scope of works from the EVA-NMB Gas Delivery System (ENGDS) Shore Approach contract for PCSB.

Dividends  No dividend was declared as expected.

Key Results Highlights QoQ, net profit and revenue were up by 97.2% and 50.9%, respectively, mainly due to part completion of the installation and construction project.

 YoY, FY13 net profit was up by 23.6%, mainly due to better overall earnings in its installation and construction division with revenue surging by 93.1% from FY12 on several barge chartering contracts and T&I projects.

Outlook  Management guided that 1H14 results could be seasonally lower due to the monsoon factor. However, this will pick-up in 2H14 on the back of installation and construction works picking up.

 Barakah is bidding for package A of the upcoming Pan Malaysia’s T&I project, which is purportedly valued at RM2.0b minimum for a period of three years (likely to be awarded end 2013).

 Besides that, it is also bidding for international work from the Gulf Region through its existing jointventure partner in Saudi Arabia. The award of contract is expected to be announced next year.

Change to Forecasts We are keeping our forecasts for now pending an update from the company on its potential involvement in the Pan Malaysia’s T&I. Currently, our forecasts only impute BARAKAH’s involvement as a subcontractor.

Rating UNDER REVIEW

Valuation  Our CALL and TP for the stock are currently under review, as we await the decision on the Pan Malaysia’s T&I contract. Should BARAKAH win the full package A of the Pan Malaysia T&I contract, we would be compelled to lift our TP to RM1.85 (from current RM1.03 based on 12x CY15 EPS).

Risks to our call  (i) A downturn in the oil & gas sector that could result in delays in contract rollouts.

 (ii) Delay in the Pan-Malaysia’s T&I project, which will reduce the potential earnings being factored in our forecasts.

 (ii) Lower-than-expected margins.

Source: Kenanga