INVESTMENT HIGHLIGHTS

• 1QFY19 normalised earnings of RM32.7m within estimates

• Earnings grew by +10.5%yoy supported by higher contribution from Healthcare Services and Infra Solutions

• Asset consultancy posted lower revenue and PBT due to completion of projects in 4QFY18

• Maintain BUY with an unchanged TP of RM3.28 per share

1QFY19 earnings within expectations. UEM Edgenta Bhd’s (Edgenta) 1QFY19 core earnings came in at RM32.7m which is within ours and consensus’ full-year FY19 earnings estimates at 20.1% and 21.0% respectively. 1QFY19 revenue grew by +12.0%yoy whilst corresponding earnings grew by +10.5%yoy mainly due to higher revenue contribution from across its business segments. On a quarterly sequential basis, both revenue and core earnings contracted by -20.3%qoq and -51.8%qoq mainly due to: (i) expiry of a HSS contract in East Malaysia; (ii) completion of installation work for performance contracting project and; (iii) reduced work done on expressways.

Healthcare services boosted by new contracts secured. Healthcare services (HS) segment revenue and PBT grew by +19.0%yoy and +19.3%yoy respectively. This was mainly attributable to increase in revenue primarily from new businesses secured during the period across the region. That said, this was offset by Property and Facility Solutions (PFS) due to completed projects in 4QFY18.

Infrastructure solutions supported by additional works. Meanwhile, segment revenue and PBT of its infrastructure services under Projek Penyelenggaraan Lebuhraya (PROPEL) increased by +13.3%yoy and +2.9%yoy respectively, mainly due to higher work done on pavements and traffic management for expressways.

Asset consultancy revenue and PBT contracted. The asset consultancy (AC) segment’s segment revenue and PBT contracted during the period by -1.2%yoy and -84.4%yoy respectively mainly due to completion of projects in 4QFY18.

Earnings forecasts. We made no changes to our FY19-20F earnings estimates at this juncture.

Source: MIDF Research - 30 May 2019