Stock Name: SENDAI
Company Name: EVERSENDAI CORPORATION BERHAD
Eversendai Corp Bhd
(Aug 23, RM1.69)
Maintain outperform at RM1.66 with fair value of RM2.27: Eversendai is on track to meet its IPO forecasts comprising net profit forecasts of RM116.7 million for FY11 and RM130.2 million for FY12 ending December with new order book guidance of RM1.4 billion.
Eversendai believes 'there is money to be made in India'. It is committing itself to the long-term growth prospects of the structural steel sector in India by investing RM50 million in a new fabrication plant on 16ha of land with an annual capacity of 36,000 tonnes of steel.
Eversendai does not believe the US and Europe debt crises and the global stock market rout will have a significant bearing on its business prospects. It holds the view that the Middle East and India are still 'behind time' in terms of infrastructure spending and for the Middle East, particularly, 'they have the money to spend'.
We maintain our forecast with the following risks: (i) new contracts secured in FY11 to FY13 coming in below our targets of RM1.4 billion, RM1.5 billion and RM1.6 billion per year; and (ii) resurgence in input costs.
We like Eversendai for: (i) having excelled in the international market, particularly, the Middle East, based on its own strength; (ii) being often nominated the structural steel subcontractor by competing contractors in international tenders, that means the structural steel sub-contracts will go to Eversendai irrespective of who wins the tenders; and (iii) its strong market position in UAE and Qatar by virtue of its 26.5% market share in terms of fabrication capacity. Indicative fair value is RM2.27 based on 14 times FY12 earnings per share, in line with our one-year forward target price-earnings ratio of 12 to 16 times for the construction sector. ' RHB Research, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
Company Name: EVERSENDAI CORPORATION BERHAD
| Research House: RHB | Price Call: BUY | Target Price: 2.27 |
Eversendai Corp Bhd
(Aug 23, RM1.69)
Maintain outperform at RM1.66 with fair value of RM2.27: Eversendai is on track to meet its IPO forecasts comprising net profit forecasts of RM116.7 million for FY11 and RM130.2 million for FY12 ending December with new order book guidance of RM1.4 billion.
Eversendai believes 'there is money to be made in India'. It is committing itself to the long-term growth prospects of the structural steel sector in India by investing RM50 million in a new fabrication plant on 16ha of land with an annual capacity of 36,000 tonnes of steel.
Eversendai does not believe the US and Europe debt crises and the global stock market rout will have a significant bearing on its business prospects. It holds the view that the Middle East and India are still 'behind time' in terms of infrastructure spending and for the Middle East, particularly, 'they have the money to spend'.
We maintain our forecast with the following risks: (i) new contracts secured in FY11 to FY13 coming in below our targets of RM1.4 billion, RM1.5 billion and RM1.6 billion per year; and (ii) resurgence in input costs.
We like Eversendai for: (i) having excelled in the international market, particularly, the Middle East, based on its own strength; (ii) being often nominated the structural steel subcontractor by competing contractors in international tenders, that means the structural steel sub-contracts will go to Eversendai irrespective of who wins the tenders; and (iii) its strong market position in UAE and Qatar by virtue of its 26.5% market share in terms of fabrication capacity. Indicative fair value is RM2.27 based on 14 times FY12 earnings per share, in line with our one-year forward target price-earnings ratio of 12 to 16 times for the construction sector. ' RHB Research, Aug 23
This article appeared in The Edge Financial Daily, August 24, 2011.
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