Bina Puri’s earnings visibility remains intact despite soft 3Q
KUCHING: Bina Puri Holdings Bhd’s ( Bina Puri) earnings visibility remains intact for the next three years despite the slight hiccup seen in the third quarter of 2016 ( 3Q16), analysts observed.
In a report, TA Securities Holdings Bhd’s research arm (TA Securities) said, “After securing a sizeable works package of Pan Borneo Highway lately, we estimate the outstanding order stands at RM2 billion, which would provide earnings visibility for the next three years.”
Going forward, the research team expected Bina Puri to tender for works packages in LRT line 3, MRT line 2 and BRT in Kota Kinabalu.
“We have assumed RM800 million order book replenishment for FY16 compared to year to date ( YTD) wins of RM561 million,” it added.
On its performance for 3Q16 and the first nine months of 2016 ( 9M16), TA Securities noted that Bina Puri’s 9M16 core profit of RM6.9 million came in within expectations.
“We deem the results in line as we expect stronger contribution from its property development, Opus, in the coming quarters, and higher contribution from its 4.2MW mini hydro power plant which started operation in June 2016,” it said.
On a year- on-year (y- o-y) basis, the research team noted that Bina Puri’s 9M16 core profit improved 10.4 per cent as top line grew five per cent to RM839.6 million.
“The better results were due mainly to the surge in property earnings (a 114 per cent pre-tax profit increase), aided by improved earnings in its power division (a 336.2 per cent pre-tax profit increase).
“However, this was partially offset by weaker performance of its construction division (a 49.9 per cent pre-tax profit decline) as construction margin declined 0.27 percentage points to 0.24 per cent,” it added.
On a quarter- on- quarter (q- oq) basis, TA Securities noted that Bina Puri’s core net profit was 11.5 per cent lower at RM2.1 million, dragged by lower contribution from its property division (a 66.5 per cent pre-tax profit decline.
“On a positive note, the construction division turned around from a LBT of RM1.2 million to a pre-tax profit ( PBT) of RM1.1 million,” it added.
Meanwhile, the power division saw an increase in PBT from RM1.6 millionto RM2.5 million after the 4.2MW mini hydro plant commenced its operation in June 2016, the research team noted.
Overall, TA Securities maintained its forecast of the group. It also maintained a ‘ hold’ call on the stock.