Review

• BPURI’s FY16 core profit of RM12.9mn came in within expectation, accounting for 102.5% of our full-year forecast.

• YoY, FY16 core profit surged 42.1% despite the top line was 17.8% lower at RM1,046.9mn. The improved results were due mainly to favourable job mix with lower minority interest. Better performance of the power division arising from higher generating capacity was offset by weaker performance by its construction, property, building materials and polyol divisions.

• QoQ, the core profit jumped 183.7% to RM6.1mn, mainly boosted by stronger performance of its construction, property and power divisions, as well as higher other operating income.

Impact

• Adjustments to our earnings forecasts are made to reflect i) actual RM561mn of construction contracts secured in FY16 versus our assumptions of RM1.0bn; and actual FY16 property sales of RM190mn versus our assumptions of RM100.0mn. All in, FY17 earnings forecast is reduced by 1.7% but earnings estimate for FY18 is raised by 10.9%.

Outlook

• Currently the group has an outstanding order book of RM1.6bn, translating into 1.9x FY16 construction revenue. This would provide earnings visibility to the group for the next 3 years.

• Its property division has an healthy unbilled sales of RM195mn after recording property sales of RM190mn in FY16, versus about RM100mn a year earlier.

Valuation

• In view of the encouraging property sales, we raise the target PE multiple for BPURI from 7x to 8x. We raise the target price of BPURI from RM0.435 to RM0.49, Maintain HOLD call on BPURI.

Source: TA Research - 1 Mar 2017