Stock Name: SIGN
Company Name: SIGNATURE INTERNATIONAL BHD
Research House: OSK
Signature International Bhd
(April 18, 75 sen)
Maintain buy at 75 sen with target price of RM1.18: SIB's unbilled order book currently stands at RM70 million. Given the short-term nature of the kitchen maker's contracts of three to six months, we think SIB may be able to recognise half of this amount for this financial year and the remainder the following fiscal year.
As stated in our previous report, SIB estimates that it could secure projects worth RM200 million to RM300 million going forward, as its market space rebounds following the rebound in the general property market.
Upon ascribing a 50% success rate, we believe SIB could book in new orders amounting to RM100 million to RM150 million for FY12. Taking an average assumption, this means SIB could well chalk up RM160 million in revenue for FY12, which is close to our forecast of RM170.3 million.
During its presentation, SIB highlighted its involvement with reputable property developers such as Bandar Raya Developments Bhd, S P Setia Bhd, Mah Sing Group Bhd and MK Land Holdings Bhd. This reinforces our view on the sustainability of SIB's ability to secure future projects within Malaysia even in the event of a property downcycle, as house buyers will always tend to prefer renowned developers, thus providing a base for recurring projects that SIB can tender for.
SIB serves all market segments via its brands Kubiq (value brand), Signature Kitchen (high-end), Binova and Nobilia (super high-end). The company's earnings are expected to still be predominantly contributed by its Signature Kitchen (SK) brand, which accounted for more than 90% of its revenue as at FY10.
Going by the large number of high-end apartments in the Klang Valley (ranging from RM450psf and above) that are nearing completion by end-this year, SIB's SK brand looks poised to cash in on this segment. As for projects where kitchen systems are not pre-installed, we understand that SIB has tie-ups with some of the above developers to promote SIB's services to house buyers. ' OSK Research, April 18
This article appeared in The Edge Financial Daily, April 19, 2011.
Company Name: SIGNATURE INTERNATIONAL BHD
Research House: OSK
Signature International Bhd
(April 18, 75 sen)
Maintain buy at 75 sen with target price of RM1.18: SIB's unbilled order book currently stands at RM70 million. Given the short-term nature of the kitchen maker's contracts of three to six months, we think SIB may be able to recognise half of this amount for this financial year and the remainder the following fiscal year.
As stated in our previous report, SIB estimates that it could secure projects worth RM200 million to RM300 million going forward, as its market space rebounds following the rebound in the general property market.
Upon ascribing a 50% success rate, we believe SIB could book in new orders amounting to RM100 million to RM150 million for FY12. Taking an average assumption, this means SIB could well chalk up RM160 million in revenue for FY12, which is close to our forecast of RM170.3 million.
During its presentation, SIB highlighted its involvement with reputable property developers such as Bandar Raya Developments Bhd, S P Setia Bhd, Mah Sing Group Bhd and MK Land Holdings Bhd. This reinforces our view on the sustainability of SIB's ability to secure future projects within Malaysia even in the event of a property downcycle, as house buyers will always tend to prefer renowned developers, thus providing a base for recurring projects that SIB can tender for.
SIB serves all market segments via its brands Kubiq (value brand), Signature Kitchen (high-end), Binova and Nobilia (super high-end). The company's earnings are expected to still be predominantly contributed by its Signature Kitchen (SK) brand, which accounted for more than 90% of its revenue as at FY10.
Going by the large number of high-end apartments in the Klang Valley (ranging from RM450psf and above) that are nearing completion by end-this year, SIB's SK brand looks poised to cash in on this segment. As for projects where kitchen systems are not pre-installed, we understand that SIB has tie-ups with some of the above developers to promote SIB's services to house buyers. ' OSK Research, April 18
This article appeared in The Edge Financial Daily, April 19, 2011.
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