Acquires MIIF's stake in CXP port
Price Target : 12-Month S$ 1.21 (Prev S$ 1.16)
•2Q13 earnings within expectation
•Acquisition of MIIF’s stake in CXP is earnings accretive
•Raise FY13F/FY14F earnings by 2%/10%
•Maintain BUY with S$1.21 TP
Within expectations. Revenue grew 5% to S$190m – within expectations - driven by better Ready Mix Concrete volumes. Net profit for the quarter included a S$2.2m doubtful debt provision relating to work for Alpine Bau GmbH at packages C917 and C918 of the Downtown Line 2 involving King Albert Park, Tan Kah Kee and Sixth Avenue Stations. Stripping out 2Q13’s doubtful debt provision, net earnings would have grown 11% to S$12m – within expectations. 1H13 earnings now account for 43% (47% excluding provision) of our forecasts.
Purchase of CXP is earnings accretive. PAN announced that it will be buying over 34.2% of MIIF’s 38% effective stake in CXP port for a consideration of S$101m, which values CXP at S$295m. PAN will ultimately control 85.5% of CXP post acquisition. Based on our estimates, PAN is acquiring CXP at 19.8x historical earnings and 13x EV/EBITDA. We believe valuations are fair given that peers are trading at 13x EV/ EBITDA and that the transaction is expected to be earnings accretive.
Maintain BUY, TP lifted to S$1.21. PAN’s outlook is expected to be better going forward with MRT projects supporting organic earnings growth. Factoring in earnings accretion from CXP, we raise our FY13F/FY14F net profit by 2%/10%. Maintain BUY on higher TP of S$1.21 based on SOTP.
Publish date: 15/08/13