E&O’s 9MFY18 core net income within expectations

KUALA LUMPUR: Eastern & Oriental Bhd’s (E&O) first nine months of financial year 2018 (9MFY18) core net income has come in within analysts’ expectations.

In a filing on Bursa Malaysia, E&O reported that the group posted profit before tax of RM134.427 million for the nine-month financial period ended December 31, 2017 as compared to profit before tax of RM66.411 million in the nine-month financial period ended December 31, 2016.

E&O’s 9MFY18 core net income of RM67.4 million came in within the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) expectation but beat consensus expectations as consensus may have underestimated the profit recognition from Seri Tanjung Pinang 2A (STP2A) land sales in FY18.

“9MFY18 earnings made up 79 per cent and 87 per cent of our and consensus full year forecast respectively,” MIDF Research said. MIDF Research thus maintained its earnings forecast for FY18-19F.

The research arm’s target price of RM2.37 per share was based on 60 per cent discount to revalued net asset valuation (RNAV).

MIDF Research also maintained its ‘buy’ call on E&O due to the positive prospect for STP2A.

“Reclamation works of STP2A is expected to complete by end 2018 while maiden launches of project on STP2A is expected to take place in mid-2019.

“Besides, near-term earnings of E&O are expected to be supported by profit recognition from STP2A land sale to the Retirement Fund Inc (KWAP),” it said.