Stock Name: BENALEC
Company Name: BENALEC HOLDINGS BERHAD
Benalec Holdings Bhd
(Aug 23, RM1.33)
Maintain buy at RM1.30 with revised fair value of RM2.22 (from RM1.90): We maintain our 'buy' call on Benalec Holdings Bhd with a higher sum-of-parts-derived fair value of RM2.22 (previously: RM1.90) after rolling forward our valuation base to FY12F.
Benalec reported FY11 net profit of RM96 million on the back of RM214 million in turnover. Excluding one-off items incurred for its listing expenses, Benalec's core net profit would have been RM91 million, and largely in line with our full-year estimates.
In 3QFY11, the group recorded some land sale gains in Melaka as well as the one-off adjustment in listing expenses.
Stripping these items off, core earnings would have been 15% higher quarter-on-quarter (q-o-q) at RM23 million. The pick-up in sequential earnings momentum came on the back of stronger billings from the Sentosa Cove project in Melaka, where construction is moving into full swing.
As a result, we estimate that core marine construction margins also rose from 39% in 3QFY11 to 41% in 4QFY11.
Benalec's outstanding order book remains healthy at about RM590 million, providing sufficient earnings visibility over the next five years.
Further out, Benalec remains bullish on the marine construction industry where there are over RM70 billion worth of job opportunities over the next 10 years.
The group has set its sights on four places ' Melaka, Penang, Johor and Port Klang, Selangor ' to spur future order book growth, especially in new areas such as marine parks and port/logistics facilities.
Beyond Melaka, Benalec is looking at a few reclamation proposals: (i) Penang airport (200ha); (ii) Penang Port (405ha) and E&O's Sri Tanjung Pinang 2 (280ha).
In Johor, Benalec is eyeing opportunities under Petroliam Nasional Bhd's refinery and petrochemical integrated development (Rapid) project in Pengerang as well as the Tanjung Bin oil terminal.
Abroad, the group will continue to bid for more marine-related construction jobs in Singapore, having secured a sizeable contract to supply and deliver construction materials in the island republic via its sister company back in 2008.
We continue to like Benalec for its deepening penetration as an integrated marine engineering specialist. Valuations are compelling at FY12F to FY14F price-earnings ratios of five to eight times against a robust three-year earnings per share compound annual growth rate of 22%. ' AmResearch, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
Company Name: BENALEC HOLDINGS BERHAD
| Research House: AMMB | Price Call: BUY | Target Price: 2.22 |
Benalec Holdings Bhd
(Aug 23, RM1.33)
Maintain buy at RM1.30 with revised fair value of RM2.22 (from RM1.90): We maintain our 'buy' call on Benalec Holdings Bhd with a higher sum-of-parts-derived fair value of RM2.22 (previously: RM1.90) after rolling forward our valuation base to FY12F.
Benalec reported FY11 net profit of RM96 million on the back of RM214 million in turnover. Excluding one-off items incurred for its listing expenses, Benalec's core net profit would have been RM91 million, and largely in line with our full-year estimates.
In 3QFY11, the group recorded some land sale gains in Melaka as well as the one-off adjustment in listing expenses.
Stripping these items off, core earnings would have been 15% higher quarter-on-quarter (q-o-q) at RM23 million. The pick-up in sequential earnings momentum came on the back of stronger billings from the Sentosa Cove project in Melaka, where construction is moving into full swing.
As a result, we estimate that core marine construction margins also rose from 39% in 3QFY11 to 41% in 4QFY11.
Benalec's outstanding order book remains healthy at about RM590 million, providing sufficient earnings visibility over the next five years.
Further out, Benalec remains bullish on the marine construction industry where there are over RM70 billion worth of job opportunities over the next 10 years.
The group has set its sights on four places ' Melaka, Penang, Johor and Port Klang, Selangor ' to spur future order book growth, especially in new areas such as marine parks and port/logistics facilities.
Beyond Melaka, Benalec is looking at a few reclamation proposals: (i) Penang airport (200ha); (ii) Penang Port (405ha) and E&O's Sri Tanjung Pinang 2 (280ha).
In Johor, Benalec is eyeing opportunities under Petroliam Nasional Bhd's refinery and petrochemical integrated development (Rapid) project in Pengerang as well as the Tanjung Bin oil terminal.
Abroad, the group will continue to bid for more marine-related construction jobs in Singapore, having secured a sizeable contract to supply and deliver construction materials in the island republic via its sister company back in 2008.
We continue to like Benalec for its deepening penetration as an integrated marine engineering specialist. Valuations are compelling at FY12F to FY14F price-earnings ratios of five to eight times against a robust three-year earnings per share compound annual growth rate of 22%. ' AmResearch, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
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