Thursday, August 29, 2013

Eversendai : Net profit eases (MIDF)

Eversendai Corporation Bhd
Maintain BUY
Price (27th Aug 2013) RM1.44
Target Price RM1.73
Net profit eases

1HFY13 net profit lagged expectations, accounting for only 30% and 29.5% of ours and market consensus full-year forecasts. This was due to a decrease in the Middle East’s revenue segment and other income contribution.
We are maintaining our forecasts and valuation, pending guidance from the management during a briefing to analysts next week.
We maintain BUY on the company with an unchanged target price of RM1.73 per share.

Profit lagging expectations. Eversendai’s 6MFY13 net profit accounted for only 30% and 29.5% of ours and consensus full year estimates respectively. The variance was due to lower-than-expected revenue recorded in the second quarter.

Growth slower than expected. Eversendai’s 2QFY13 net profit dropped -48.5%yoy from RM32.3 to RM16.6m which was partly due to a -15% decline in revenue from the Middle East, as well as lower other income contribution. However, this was partially cushioned by higher revenue contribution from India and Malaysia. The decline in cumulative net profit was also attributed to the additional costs for EMCO Power Plant project in Warora Worli Mixed-use Development project due to variation works incurred. Nonetheless, the additional cost has yet to be finalized.

No change to forecasts. We make no changes to our forecast and valuation pending guidance from the management in briefing to analysts next week.

Maintain BUY. We are maintaining our target price for Eversendai at RM1.73. The target price is pegged at PE multiple of 9.6x to FY13 EPS of 18.0 sen. We continue to like Eversendai as it is a niche contractor in the supply of structural steel with a healthy orderbook of RM1.5b. It has strong presence and excellent track record in the international markets, particularly the Middle East. This strengthens its market position and odds of winning more jobs.

Source/Extract/Excerpts/来源/转贴/摘录: MIDF-Research,
Publish date: 28/08/13

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