Mitrajaya’s 1Q17 broadly in line on seasonally slower quarter

KUCHING: Mitrajaya Holdings Bhd’s ( Mitrajaya) first quarter of 2017 (1Q17) results were broadly in line with analysts’ expectations due to the first quarter typically being a seasonally slower quarter for the group.

In a filing on Bursa Malaysia, Mitrajaya reported that for the first quarter ended March 31, 2017, the group’s profit before associate and tax rose by RM13.74 million to RM37.64 million from RM23.9 million in the preceding year’s corresponding quarter.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) deemed Mitrajaya’s 1Q17 core net profit ( CNP) of RM18.9 million to be broadly within its (19 per cent) and consensus expectations as it noted that 1Q is typically a seasonally slower quarter for the group.

Kenanga Research expected construction billings to pick up in the remaining part of the year.

“No dividends declared as expected,” the research arm said.

The research arm derived its CNP after stripping off RM9.9 million gains on disposal of Mitrajaya’s Johor land.

Kenanga Research highlighted that currently, Mitrajaya’s outstanding order-book stands at circa RM1.73 billion, providing earnings visibility for another circa 1.5 to two years.

Jobs secured year to date (YTD) amounted to RM434 million, which accounted for 54 per cent of Kenanga Research’s RM800 million target with a remainder RM366 million to be achieved.

The research arm noted that its replenishment RM800 million was slightly more conservative against management’s target guidance of RM1 billion.

“For their property arm, unbilled sales stood at RM204 million (mostly from Wangsa 9 residency) and expected to provide circa two year visibility to the group,” Kenanga Research said.

“Meanwhile, its South Africa division will see unbilled sales of 24 million rand ( RM7.3 million) recognised progressively upon completion of the transfer of ownership in financial year 2017 (FY17).”

On forecasts, no changes were made to Kenanga Research’s FY17-18E earnings of RM102 million and RM99 million, respectively.

Post results, Kenanga Research maintained Mitrajaya’s target price of RM1.49 per share after rolling forward valuation base year for the group’s construction and property segmental earnings.

Given that Mitrajaya’s share price has caught up with its valuations and the risk-reward ratio is no longer as compelling with no new catalyst ahead, Kenanga Research downgraded Mitrajaya’s rating to ‘ market perform’, from ‘out perform’ previously.