Review

• Stripping out an exceptional net gain amounting to RM4.6mn, TRC’s FY22  core profit of RM17.9mn came in above expectations, accounting for  119.9% and 108.3% of ours and consensus’ full-year estimates. The positive variance was mainly attributed to upward revision of margin for certain projects that were near completion.

• YoY, FY22 core profit fell 17.9% to RM17.9mn, while revenue was 11.1%  lower at RM677.4mn. The weaker earnings performance was mainly due to the share of losses from the joint venture compared to the previous share of profit as well as lower revenue. The softer performance in the joint venture was primarily due to a delay in property handover as a result of shortage of workers.

• QoQ, 4QFY22 core profit surged 195.7% to RM8.9mn while revenue increased by 19.4% to RM164.5mn. The stronger earnings performance was mainly due to upward revision of margin for certain projects that were near completion.

• Its net cash position eased from RM140.2mn a quarter ago to RM115.4mn.

Impact

• Maintain FY23 and FY24 earnings forecasts. Meanwhile, we introduce FY25  numbers with a projected net profit of RM28.0mn, representing an earnings growth of 8.1%.

Outlook

• Based on our estimation, the group’s current outstanding construction order book stands at around RM0.6bn, translating to about 0.9xFY22  revenue. Meanwhile, the group is one of the frontrunners for the MRT3  project thanks to its extensive track record in railway projects.

Valuation

• No change to our target price of RM0.38, based on unchanged 8x CY23  earnings. Maintain Buy on TRC.

Source: TA Research - 1 Mar 2023