FFB  announced  on  Bursa  Malaysia  yesterday  that  it  has  received purchase orders or letters of intent worth MYR161.1m that will boost its total  YTD  orders  to MYR315.9m. We remain positive on the company’s prospects as it will benefit from  heightening oil & gas and construction activities in the region. We reiterate our BUY call, with an unchanged FV of MYR3.35, pegged to a conservative 10x FY13 EPS.

- Six  cranes  ordered.  Favelle  Favco  (FFB)  has  secured  orders  for  five offshore cranes and one tower crane  worth a total of  MYR161.1m. This brought its  total orders secured YTD to  MYR315.9m, bringing the  total number of cranes ordered YTD  to 17. This order  boosted  its  order  book to MYR645m as at end-May 2013. We believe the company will continue to secure orders  for offshore cranes  in 2H13  given the robust oil & gas activities in the region.

- No  changes  to  earnings  estimate.  We  project  that  the  company  will recognize MYR54m out of the  latest  MYR161.1m in  orders  in FY13. As we  had  previously  factored  in  MYR187.2m  worth  of  jobs  to  be recognized this year, there will be no changes to our earnings estimate. 

- Dividend  of  7.66  sen  per  share.  FFB  shareholders  approved  the company’s  proposed  7.66  sen  dividend  for  FY12  at  its  recent  annual general meeting. Investors who own  FFB shares before 16 Aug 2013 will be rewarded with  a  3.15% dividend yield based on yesterday’s closing price.

- Maintain BUY. All in all, we reiterate our BUY recommendation on FFB given that the company is a key beneficiary of increasing activities in the oil & gas (O&G) and construction sectors in this region. This is supported by its  MYR645m-strong order  book. Our FV is unchanged at MYR3.35, pegged to 10x FY13 EPS. The stock still offers decent dividend yields of 3.4% for FY13 and 3.9% for FY14, based on a 25% payout ratio.

Source: RHB