Faber’s 1QFY13 core earnings of MYR11.5m missed both consensus and our expectations due to weaker-than-expected contributions from its concession and property businesses. We trim our FY13F and FY14F earnings estimates by some 2.0%-5.7% and at the same time introduce our FY15F forecasts. Maintain BUY, with our FV revised higher to MYR1.94.

¨      Disappointing start. Faber’s 1QFY13 revenue dropped to MYR173.0m (-6.0% y-o-y; -34.1% q-o-q) as declining contributions from its non-concession and property businesses were partly offset by growth in its core concession segment, which saw higher variation orders and increased bed occupancy rates at some of its hospitals. PBT, meanwhile, sank 20.7% y-o-y and 76.2% q-o-q to MYR22.8m as the implementation of minimum wages effective 1 Jan 2013 eroded profits at its concession business. All in, Faber’s 1QFY13 core earnings came in at a subpar MYR11.5m, falling short of both our and consensus estimates, comprising only 16.3% and 16.0% of the full-year forecasts respectively.

¨      Earnings revision. We have revisited and revamped our earnings forecasts following an internal coverage reallocation. Our core earnings estimates currently stand at MYR66.4m for FY13F (-5.7% from MYR70.4m previously) and MYR47.5m (-2.0% from MYR47.5m previously) for FY14F. We also take the opportunity to introduce our FY15F revenue and net profit estimates of MYR564.3m and MYR50.8m respectively.

¨      Maintain BUY.  We maintain our BUY call on Faber as the renewal of its hospital support services concession will give more clarity on its future earnings. Furthermore, the group remains the front-runner for the subcontractor role in Sabah and Sarawak given its established f service infrastructure network and good track record. Our SOP-based FV now stands at a revised, but a higher MYR1.94.

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Source: RHB