iris corporation berhad_rimbunan kaseh to come in next quarter_120827
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TA SecuritiesA Member of the TA Group
R E S U L T S U P D A T E
Monday, 27 August, 2012
FBMKLCI: 1,648.22 MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Sector: Manufacturingl
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IRIS Corporation Berhad
TP: RM0.31(+77.1%) Rimbunan Kaseh to come in next quarter Last traded: RM0.175
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* BUY
Tan Kam Meng, CFA
+603-2072-1277 ext:1614
[email protected] www.taonline.com.my
Review
� 1Q13 net profit of RM8.3mn accounted for 18.3% of our full-year
forecast. However, we consider this within our expectation as we have
assumed contributions from two key projects, i.e.: Rimbunan Kaseh and
the waste-to-energy incineration plant in Phuket, to begin from 2Q13
onwards.
� 1Q13 net profit surged 42% largely due to lower effective tax rate as
compared with the same period of last year. At the pre-tax level,
earnings dropped 14% despite a 7.5% growth in revenue due to
increased contribution from low-margin contracts.
� Sequentially, 1Q13 revenue surged 32.5% and this has filtered down to
bottom line with a 32.8% increase in net profit. For this quarter, the
group derived significant revenue from existing projects namely,
Malaysian e-Passport Inlays and Tanzania e-ID cards, and new project,
i.e.: the implementation of Malaysian e-Passport ICAO compliance
project.
Impact
� No change to our FY13-15 earnings projections.
Outlook
� Iris procured a Rimbunan Kaseh project from Pahang State Government
worth RM23mn in end-June/12. Given the short construction duration
of 60 days, we expect the project to contribute RM6.4mn profit before
tax in 2Q-3Q, assuming a margin of 28%. This represents 61% of PBT
achieved in 1Q13.
� Note that Iris’ 51%-owned PJT technology has completed the
construction of a waste-to-energy incineration plant in Phuket, which is
expected to commence operations soon. Based on an average offtake
rate of THB6.42/kWh, the plant could potentially generate
approximately RM42mn in revenue per annum.
� We believe Iris’ involvement in the ticketing solution system for Kelana
Jaya Line and Ampang Line would provide the company an opportunity
to secure the MRT ticketing solution system, when the tender is called.
Valuation
� We maintain our target price at RM0.31/share, based on unchanged 10x
CY13 earnings. Maintain BUY.
Share Information
Bloomberg Code ICB MK
Stock Code 0010
Listing ACE Market
Share Cap (mn) 1575.0
Market Cap (RMmn) 275.6
Par Value 0.15
52-wk Hi/Lo (RM) 0.205/0.13
12-mth Avg Daily Vol ('000 shrs) 6147.0
Estimated Free Float (%) 83.6
Beta 0.93
Major Shareholders (%)
Perbadanan Nasional Bhd - 8.4
Versatile Paper Boxes S/B - 8.03
Forecast Revision
FY13 FY14
Forecast Revision (%) - -
Net profit (RMm) 45.6 48.9
Consensus - -
TA's / Consensus (%) - -
Previous Rating
Financial Indicators
FY13 FY14
Net Debt/Equity (%) 23.5 13.8
CFPS (sen) (1.1) 2.8
Price/CFPS (x) na 5.8
ROE (%) 10.5 10.3
NTA/Share (RM) 0.2 0.2
Price/NTA (x) 0.9 0.8
% of FY
vs TA 18.3 Within
vs Consensus -
Share Performance (%)
Price Change IRIS FBM KLCI
1 mth 9.4 1.4
3 mth 6.1 6.3
6 mth (2.8) 5.7
12 mth 25.0 14.1
Buy (Maintained)
SCORECARD
(12-Mth) Share Price relative to the FBM KLCI
Source: Bloomberg
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TA SecuritiesA Member of the TA Group 27-Aug-12
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Earnings Summary (RM’mn)
FYE March 31 (RMmn) FY10# FY12* FY13F FY14F FY15F
Revenue 366.1 509.0 534.8 552.3 578.7
EBITDA 71.5 95.5 99.1 103.5 103.8
EBITDA margin (%) 19.5 18.8 18.5 18.7 17.9
Pretax profit 41.6 66.3 70.2 75.3 75.8
Net profit 27.3 45.2 45.6 48.9 49.3
Core net profit 27.3 45.2 45.6 48.9 49.3
EPS (sen) 1.7 2.9 2.9 3.1 3.1
Diluted EPS (sen) 1.7 2.5 2.5 2.7 2.7
EPS growth (%) 75.1 42.2 1.0 7.2 0.6
PER (x) 10.1 7.1 7.0 6.6 6.5
GDPS (sen) 0.5 0.5 0.5 0.5 0.5
Div yield (%) 2.6 2.6 2.9 2.9 2.9
Core ROE (%) 7.9 11.4 10.5 10.3 9.5
* comprising 15-month earnings from Jan-11 to March-12
# ended December 2QFY12 Results Analysis (RMmn) YE Mar 2Q12* 5O12* 1Q13 QoQ (%) YoY (%)
Revenue 95.3 77.3 102.5 32.5 7.5
EBITDA 16.5 10.0 14.3 42.4 (13.2)
Depr & Amor. (1.2) (1.2) (1.2) (3.2) 4.9
Interest Expenses (2.8) (2.6) (2.5) (3.2) (10.0)
Associate (0.4) (0.8) (0.1) (82.9) (64.7)
Pre-tax Profit 12.1 5.4 10.4 93.0 (14.0)
Tax Expenses (6.3) (0.3) (3.2) >100 (49.9)
MI 0.0 1.1 1.0 (8.5) nm
Net Profit 5.8 6.3 8.3 32.8 42.5
EPS (sen) 0.41 0.42 0.5 26.2 29.3
DPS (sen) 0 0.45 0.0 nm nm
EBITDA Margin (%) 17.3 13.0 13.9 1.0 (3.3)
Pre-tax Margin (%) 12.7 7.0 10.2 3.2 (2.6)
Net-Margin (%) 6.1 8.1 8.1 0.0 2.0
Effective tax rate (%) 51.8 5.2 30.2 25.0 (21.6)
* Change of financial year to March from December
Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any
direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the CBRS or the subject
company. For more information about CBRS and other research reports, please visit Bursa Malaysia’s website at:
http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/eResearch.jsp
for TA SECURITIES HOLDINGS BERHAD(14948-M)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Kaladher Govindan – Head of Research