• 12MFY14  core  net  profit  made  up  84%  of  ours  and consensus’15MFY14 forecasts.
• Raise 15MFY14 earnings by 16% for the strong 4QFY14 results.
• Maintain HOLD with an unchanged MYR1.35 TP (10x 2016 PER).

What’s New

4QFY14  results  were  spectacular.  Core  net  profit  of MYR28m  (+131% QoQ, +168% YoY) took 12MFY14 core earnings to MYR62m (+52% YoY). The  QoQ  growth  came  mainly from  higher  revenue  from its  pipeline & commissioning  services  (+101%)  via  its  Pan  Malaysia  T&I  Package A works.  Barakah  recognised  3  months  works  from  Package  A  in  4Q (MYR85m,  33%  of  group  revenue)  vs.  1-month  in  3Q  (MYR40m).  Its installation & construction also aided revenue growth, up 41% QoQ.   

What’s Our View

We  raise  15MFY14  earnings  forecast  by  16%  to  account  for  the better-than-expected  4Q  results.  Works  for  the  T&I  Package  A  job will  continue to  anchor  5QFY14  performance.  We  expect  Barakah  to deliver  a  lower  core  net  profit  of  MYR22m  (-21%  QoQ)  in  the  final quarter due to slowdown of non T&I work.

Our  FY15-16  earnings  forecasts  are  unchanged.  While  we  expect Package A  to  continue  to  drive  earnings,  workflow  visibility  remains hazy for now, which Barakah concurs. We expect  strong 33% earnings growth in  FY15 from the full-year contribution from Package A but a flattish  FY16,  on  expectation  of  slowdown  of  workflows  as  broader industry  job/capex  reviews  kick  in.  We  expect  the  T&I  Package A  to generate MYR600m revenue p.a. in 2015-16.

Barakah  has  secured  MYR370m  new  jobs  for  FY14-to  date,  bringing its order  backlog  to  MYR2.1b  as  at  end-Nov  2014,  which  will  sustain earnings  visibility  over  the  next  2  years.  It  aims  to  replenish MYR600m  worth  of  works  annually.  It  remains  in  the  running  for several  Pengerang  related  works  (i.e.  tie-ins,  at  e.MYR300m,  the awards are expected in 1Q15).

Source: Maybank Research - 26 Nov 2014