Stock Name: FABER
Company Name: FABER GROUP BHD
Company Name: FABER GROUP BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.34 |
Faber's FY11 results came in well ahead of our and consensusexpectations, with its FY11 net profit making up 246% and 169% of therespective FY11 net profit forecasts. The outperformance was largely due tohigher-than-expected revenue coupled with the reversal of cost amounting toRM40.7m in 4QFY11 in relation to the recognition of expenses in 3Q for its IFMcontracts in the UAE. We maintain our FY12 forecast and introduce our FY13 forecast. We arekeeping our Trading Buy call on Faber at a slightly higher FV of RM2.34 fromRM2.24 previously after rolling over our SOP valuation from FY11 to FY12.
A comprehensiveoutperformance. Faber recorded a net profit of RM60.2m for FY11 which waswell above our and consensus estimates, accounting for about 246% and 169% ofthe respective forecasts. The better-than-expected results could be attributedto the sizzling revenue but primarily the reversal of cost amountingto RM40.7m in 4Q in relation to its IFM contracts in UAE. In 3Q, Faber hasrecognized expenses of RM44.5m for additional work done for its IFM contracts in the UAE andimpairment losses of RM12.9m arising from the expected delay in collecting trade receivables fromthe contracts, both of which had resulted in a net loss of RM26.9 in 3Q. If we exclude the cost reversal, Faber's FY11net profit would come well within our expectations.
Segmentalperformance. The IFM concession business remained the biggest contributorto the group's topline, constituting about 61.9% of the FY11 total revenue. Y-o-y revenue from its IFMnon-concession business was down by 31.7% due to the non-renewal of contractsin the UAE. As expected, its property business recorded a strong y-o-y growthin revenue which was up by 127.5% y-o-y, supported by the progress billingsfrom projects launched in 4QFY10 and 1HFY11. Overall, revenue was up marginallyby 2.2% y-o-y as the lower revenue contribution from the UAE wasmitigated by the higherrevenue from its property division. Nevertheless, net profit was down by 23.6%y-o-y attributed to the RM23.4m loss recorded by its IFMnonconcession business.
Maintain Trading Buy.We maintain our FY12 forecast as well asintroduce our FY13 forecast. We maintain our Trading Buy recommendation onFaber at a slightly higher FV of RM2.34 from RM2.24 previously after rollingover our SOP valuation from FY11 to FY12. Despite the delays in the renewal ofits hospital support services concession, we believe that Faber should have no problems getting the renewal given its solid track record over the last 15 years. Our FY12forecast is premised on the assumption that the concession would berenewed according to the existing terms. Also, Faber has announced a gross dividend of 8 sen for FY11, which translates into a gross yield of about 4.7%.
Source: OSK188
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