MITRA (9571) - Mitrajaya Holdings - Achieving a record quarter




MITRA (9571) - Mitrajaya Holdings - Achieving a record quarter

Results
  • Mitrajaya reported 2QFY16 results with revenue of RM245.6m (+1% YoY, +26% QoQ) and earnings of RM29.6m (+28% YoY, +61% QoQ). On a quarterly basis, this is the highest level of earnings achieved. Cumulative 1HFY16 earnings totalled RM48.1m, up +32% YoY.

Deviation

  • 1HFY16 earnings made up 48% of our full year forecast and consensus which is within expectations.

Dividends

  • None declared. Usually in 4Q.

Highlights

  • Construction continues to perform. The construction division experienced the best of both worlds with topline growth and margin expansion. 1H revenue rose by 17% along with an EBIT margins expanding from 11.6% to 12.9% YoY. The former was attributed to higher orderbook execution and the latter due to prudent project management and effective cost controls.
  • Decent job wins. YTD, Mitrajaya has managed to secure 3 contracts totalling RM503m. This has already surpassed the full year sum for FY15 at RM469m. Its orderbook of RM1.5bn translates to a 1.9x cover ratio on FY15 construction revenue.
  • Awaiting the big one. With 7 packages of the Pan Borneo Highway (PBH) awarded, there are 3 more up for grabs. We reckon that Mitrajaya (via a JV with 2 local “Sarawakian” companies) is in a decent position to secure 1 of the remaining 3 packages. Based on the average package size of RM1.4bn so far and Mitrajaya’s 30% stake in the JV, its attributed contract value would be RM430m. This could potentially boost its orderbook by 29% to RM1.9bn.
  • Property drag from finance cost. Overall 1H property revenue was flat YoY as higher domestic contribution (mainly Wangsa 9) was offset by the fall in South Africa. Division PBT slipped -2% YoY largely due to inter-co finance cost expensed off to the income statement.

Risks

  • Slower than expected orderbook replenishment.

Forecasts

  • Our forecast is unchanged as the results were inline.

Rating

  • Maintain BUY, TP: RM1.88
  • Mitrajaya offers decent earnings growth prospects with a 3- year CAGR of 11.2%. Securing a package of the PBH could be the next catalyst.

Valuation

  • Our SOP based TP of RM1.88 implies FY16-17 P/E of 12.7x and 11.5x respectively.
Source: Hong Leong Investment Bank Research - 19 Aug 2016

MITRA (9571) - Mitrajaya Holdings - Achieving a record quarter