1H20 results underpinned by strong pipeline Maybank IB Retail Research
TCS, which provides construction services for buildings, infrastructure, civil and structural works in Malaysia, reported a net profit of MYR1.0m and MYR6.1m in 2Q20 and 1H20 respectively. If not for the MYR2.3m listing expenses, TCS’ 2Q and 1H net profit would have been higher at MYR3.3m and MYR8.3m respectively. No comparative figures were available as the group was listed on the ACE Market on 23 Jul 20. The group declared a first interim single-tier dividend of 1 sen/sh. In 1H20, revenue was contributed by on-going projects such as the Hermington project, the Tropicana Urban Homes project and the Suria Pantai project. Residential projects continued to be its anchor revenue driver, accounting for 98% of the group’s revenue. At present, prospects for its construction business look promising, underpinned by an estimated order book of MYR670m, which is equivalent to 1.9x its FY19 revenue.
Notably, the group has already secured two new contracts worth a total of MYR214.7m since its listing. Having a strong pipeline is crucial for TCS, for management has indicated that it will remain as a pure play construction company. Besides tendering for more projects to replenish its construction order book, the group also intends to widen its scope to include works related to major roads, highways and bridges. At present, no broker covers the stock. But as earnings visibility improves, it should garner greater interest from the investment community. Since its listing on 23 Jul 2020, its share price soared 87%. Valuation wise, the stock is trading at 9.3x annualised 1H20 core EPS of 4.6sen. In comparison, the Bursa Malaysia Construction Index trades at a prospective 2020 P/E of 14.7x. Potential share price catalyst includes more job wins.
Stock: [TCS]: TCS GROUP HOLDINGS BERHAD
2020-09-15 18:37 | Report Abuse
Analyst upbeat on TCS:
1H20 results underpinned by strong pipeline
Maybank IB Retail Research
TCS, which provides construction services for buildings, infrastructure, civil and structural works in Malaysia, reported a net profit of MYR1.0m and MYR6.1m in 2Q20 and 1H20 respectively. If not for the MYR2.3m listing expenses, TCS’ 2Q and 1H net profit would have been higher at MYR3.3m and MYR8.3m respectively. No comparative figures were available as the group was listed on the ACE Market on 23 Jul 20. The group declared a first interim single-tier dividend of 1 sen/sh.
In 1H20, revenue was contributed by on-going projects such as the Hermington project, the Tropicana Urban Homes project and the Suria Pantai project. Residential projects continued to be its anchor revenue driver, accounting for 98% of the group’s revenue. At present, prospects for its construction business look promising, underpinned by an estimated order book of MYR670m, which is equivalent to 1.9x its FY19 revenue.
Notably, the group has already secured two new contracts worth a total of MYR214.7m since its listing. Having a strong pipeline is crucial for TCS, for management has indicated that it will remain as a pure play construction company. Besides tendering for more projects to replenish its construction order book, the group also intends to widen its scope to include works related to major roads, highways and bridges. At present, no broker covers the stock. But as earnings visibility improves, it should garner greater interest from the investment community. Since its listing on 23 Jul 2020, its share price soared 87%. Valuation wise, the stock is trading at 9.3x annualised 1H20 core EPS of 4.6sen. In comparison, the Bursa Malaysia Construction Index trades at a prospective 2020 P/E of 14.7x. Potential share price catalyst includes more job wins.