Binasat’s top-line to perform better than country’s GDP growth in FY18 — Analysts

KUALA LUMPUR: Binasat Communications Bhd’s (Binasat) top-line has been projected by analysts to perform better than the country’s gross domestic product (GDP) growth in financial year 2018 (FY18).

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), this is in spite of half of Binasat’s earnings depending on telecom projects f low (which tends to fluctuate).

“However, its staff costs and depreciation are expected to trend higher in tandem with the higher project f low coupled with more assets acquired,” Kenanga Research said.

All in, Kenanga Research expected the group’s net profit to grow by three per cent in FY18 (to RM10.3 million) on the back of 6.8 per cent year on year (y-o-y) climb in revenue coupled with similar gross profit (GP) margin of 37 per cent.

Although management has yet to outline the dividend policy, the research arm expected Binasat to continue rewarding the group’s shareholders.

The research arm noted that by assuming a similar dividend pay-out ratio of circa 20 per cent (similar to FY17) in FY18, Binasat is expected to declare a dividend per share (DPS) of 0.8 sen, translating into 1.7 per cent dividend yield.

“The group’s recurring income makes up of circa 49 per cent of total revenue on average, widely owing to its operations and maintenance services for the satellite (including uplink and downlink services), mobile and fibre-optic segments.

“The recurring income contracts’ duration, however, appears short as it merely comes in at an average one to four years.”

On Binasat’s initial public offering (IPO) which is expected to raise RM39.6 million based on 86 million new shares, Kenanga Research noted that proceeds will be utilised mainly for funding of a new teleport facility.

It further noted that this could give rise to new satellite services offerings while reducing internal reliance on overseas satellite downlink services.

“Likewise, existing operations and maintenance and fibre optics services capability will be enhanced through establishment of new warehouse, research and development facilities as well as procurement of new vehicles and equipment.”