9MFY14 core net profit made up 47%/43% of ours/consensus’ 15MFY14 forecasts – in line.

Crystalisation of tender pipeline - RSC, Saudi Arabia T&I & Pengerang works will catalyse earnings and sentiment.

Maintain BUY and MYR1.90 TP, pegged to 14x FD FY15 PER.

What’s New

3Q14 core net profit of MYR12m (+130% YoY; +12% QoQ) took 9M core earnings to MYR34m (+11% YoY). The QoQ growth was driven by stronger revenue contribution from its installation & construction operations (+12%). The key driver was the completion and delivery of the KPOC topside installation works in June’14.

This helped to offset weaker revenue from the pipeline & commissioning services (-30%) due to minimal works recognised for the Pan Malaysia T&I Package A works (MYR40m; started in June’14). As such, its KL 101 pipelay barge was relatively immobilised YTD (opex: MYR1.1m/mth).

What’s Our View

Our forecasts are unchanged. We expect earnings to improve over the next 6 months: (i) as contributions from Pan Malaysia Package A T&I work kick-in earnestly and (ii) interest savings (MYR6m p.a.) from the successful refinancing of its loans in July. Operationally, Barakah is scheduled to complete 3 T&I works this FY (value: ~MYR360m) for PCSB’s Dulang (platform-cable laying), Dalak (pipeline) and Labuan-Sipitan (shore approach) fields. For this, KL 101 will be operating at optimal level in Jul-Dec’14.

Order backlog stood at MYR2.3b (-5% QoQ) as at Aug 2014. Tender pipeline remains strong. It recently secured additional works for the Pengerang pipeline, which doubled the project value to MYR280m. Barakah is also in the running for several Pengerang related works (tie-in, piping; e.MYR300m; to be known in 1Q15).

Source: Maybank Research - 29 Aug 2014