Price – RM0.545
Target – RM0.67
The outsourcing trend by MNCs creates opportunities for players such as SKP to be their suppliers. We expect SKP to continue seeing good growth momentum. SKP has a strong balance sheet backed by net cash of RM57m as at FY11. We opine that the strong balance sheet can adequately steer the future direction of earnings. Looking to 2012, we expect the group to generate double-digit earnings growth and positive operating cash flow while further investing in the long-term growth of the group. The group now has a dividend payout policy of 50% of profit after tax (PAT). There is potential for the group to increase its dividend payout policy given its solid financial capabilities. We expect SKP to pay 3 sen DPS in FY12 while in FY13; it should improve to 3.5 sen ashare. This translates into an attractive dividend yield of 5.5% and 6.4% respectively. We are initiating coverage on SKP with a BUY rating. This implies a total potential upside of 28% from current price levels. We like SKP due to its good business model, strong balance sheet, solid sales and earnings growth, positive free cash flow, attractive valuations and a rising dividend payment.– TA Securities (14 Mar)
Price – RM0.43
Target – RM0.43
CBSA’s 4Q11 financial report card turned in with favourable results as net profit surged more than two-fold to RM6.7m underpinned by a 53.5% increase in revenue. Net profit was inclusive of a landmark court decision ruled in CBSA’s favour, netting it roughly RM7.1m in additional revenue. Even if we strip away this one-time revenue recognition, CBSA’s results were still ahead of our expectations. Revenue was however flattish sans the exceptional item. A high margin project undertaken by its IT division managed to boost performance and push earnings ahead. After fine tuning our earnings model, we raise our FY12 net profit estimate to RM13m from RM10.5m as we factor a 5% growth in CBSA’s revenue. CBSA’s strategic partnership with internet giant, Google as well as stable contributions from its Search & Advertising division provides impetus for our favour for CBSA. However, given the short term nature of its IT projects, earnings visibility is decidedly low and with a challenging economic outlook, growth catalysts could be few and far between. Retain HOLD. – ZJ Research (7 Mar)
Bina Puri Holdings
Price – RM0.94
Target – RM1.30
Bina Puri Holdings’s (BPH) registered FY11 revenue of RM1.18b, a decrease of RM53.3m (4.3%) from RM1.23b over the previous corresponding period. Despite that, profit before tax grew by 80.1% with operating margins registering 2.6% versus 1.4% in FY10, as projects secured were more profitable. This trend is set to maintain/continue with more lucrative property development projects being added to its order book. On aggregate, new additions have a gross development value of RM800m, with them located in areas such as Klang Valley, Johor Bahru, Kota Kinabalu, and consisting of the new highway concession in Pakistan. Currently, BHP’s global order book stands at RM2.7b after several quarters of strong growth. Value investors will be attracted by the combination of respectable earnings growth at multiples in line company’s peers, with average return on equity heading to levels of 14% to 16%. While a rising exchange rate could affect overall profitability, we maintain our BUY recommendation. – Wilson & York Global Advisers (29 Feb)
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