FULLY VALUED S$0.29
STI : 3,229.91
Price Target : 12-Month S$ 0.24 (Prev S$ 0.28)
Loses out on Myanmar airport projects
• Incheon Airport Group wins Hanthawaddy International Airport Project
• Pioneer Aerodome Services reported to have won Yangon Airport development project
• Slow order book, low margins going forward
• Maintain FULLY VALUED with TP lowered to S$0.24
Incheon Airport Group wins Hanthawaddy International Airport Project. The Myanmar Department of Civil Aviation (DCA) announced that Incheon Airport Group has successfully won the tender for the US$1.1bn development of Hanthawaddy International Airport (HIA). Yongnam’s consortium has been appointed as the backup tenderer. Three other bidders which submitted bids were Korea’s Incheon Airport Group, France’s Vinci Airport and Japan’s Taisei corporation.
Pioneer Aerodome Services reportedly to have won Yangon Airport development project. Separately, according to the Myanmar business network website, Pioneer Aerodrome Services consortium is the successful bidder for the Yangon International Airport development project. With that, Yongnam has announced that it had lost both Myanmar airport projects.
Lacks stock catalysts, potential downside risk to share price. Yongnam returned a poor set of results for 2Q13 with weaker than expected margins and a slow order book. Stock
catalyst had been centered around Yongnam winning one or both of the two airport projects, but Yongnam has now lost out on both projects. Without the airport projects, organic
earnings are expected to be weaker in FY14F due to its slow order book and weak margins. Our previous TP was based on 10x target PE in anticipation of Yongnam winning the airport projects. Now that it has lost out on the Myanmar projects, we revise TP to S$0.24 based on blended 7x FY14F earnings and book value per share of S$0.28
Publish date: 13/08/13