Boilermech’s FY13 results were within our forecasts, with top-line of MYR165.8m accounting for about 101.4% of our full-year estimate. Its net  profit  of  MYR23.7m  was  slightly  above  expectations  on  improved  margin.  Due  to  a  change  of  FYE  from  April  to  March,  FY13  only comprised 11 months’ contribution. Hence, the group’s annualised net profit of MYR25.9m represents a 34.3%  y-o-y jump compared with FY12  full-year  net  profit  of  MYR19.3m,  on  the  back  of  a  20.9%  jump  in  annualised  revenue.  On  a  quarterly  basis,  annualised  net  profit surged  25.4%  to  MYR10,  vs  3QFY13’s MYR8.1m.  The  better  performance  was  largely  attributed  to  increased  manufacturing  activities, deliveries and installation of boilers. Factoring in a higher margin assumption, we upgrade our FV to MYR1.70, pegged to an unchanged P/E of 14x and a PEG of 0.4x. Maintain BUY. 
 
Within expectations. Boilermech’s FY13 results were  largely in line with our estimates, with its top-line of MYR165.8m accounting for about 101.4% of our full-year estimate. Its net profit of MYR23.7m was slightly above expectations on improved margin. Due to a change of FYE from April to March, FY13 only comprised 11 months’ contribution. Hence, the group’s annualised net profit of MYR25.9m represents a 34.3% y-o-y jump  compared  with  FY12  full-year  net  profit  of  MYR19.3m,  on  the  back  of  a  20.9%  jump  in  FY13  annualised  revenue.  Overall,  margins improved  due  to  higher-margin  projects  in  FY13.  EBIT  margin  rose  from  15.0%  in  FY12  to  18.2%  in  FY13.  Although  4QFY13  results  only consisted  of  2-month  contribution,  the  overall  results  were  still  higher  y-o-y.  4QFY13  PBT  of  MYR7.6m  was  a  tad  higher  than  4QFY12’s MYR7.4m.  On  a  quarterly  basis,  annualised  net  profit  surged  25.4%    to  MYR10.1m,  compared  with  MYR8.1m  in  3QFY13.  The  better performance was large attributed to increased manufacturing activities, deliveries and installation of boilers.   

Final single tier dividend of 2 sen. The company proposed a final single tier dividend of 2 sen, up from 1.5sen in FY12. Boilermech remains in a net  cash  position  despite  completing  a  land  purchase  in  last  year.  It  has  total  cash  and  liquid  investments  of  MYR40.1m,  with  net  cash  per share of 15.1sen as at end-March 2013.

Maintained BUY, FV revised to MYR1.70. Going forward, Boilermech sees no changes in its business model and direction, as it will continue to focus on its forte in biomass boiler manufacturing while seeking opportunities to expand horizontally into other regions, as well as vertically by offering other renewable energy solutions. We expect an expansion in production capacity by 2H this year. Factoring in a higher margin on its FY14F,  we  tweak  our  FV  higher  MYR1.70,  pegged  to  an  unchanged  P/E  of  14x,  which  we  deem  reasonable  with  its  price  earnings-to-growth ratio (PEG) of 0.4x.

Source: RHB