FY12 core net profit of S$40.6m met
our S$41.5m estimate and
consensus’s S$40.3m. Operating
momentum has been positive. We
raise our FY13-14 numbers by 7-9%
and introduce FY15. Our residual
income-based target price rises to
S$0.91. However, given the recent
price run-up, we downgrade PUC
from Outperform to Neutral as
near-term potential is priced in.
Topline grew 39.5% yoy largely due to
a 33.6% increase in revenue
contribution from Basic Building
Resources (BBR) Core net profit rose
38.9% yoy to S$40.6m. The key
positive this year was a successful
turnaround of its loss-making
shipping business as PUC cut capacity
and raised utilisation by shipping coal
offtake from its investments in
Indonesia.
Despite inflationary
pressure on costs, margins held up for
most of its business segments,
reflecting good cost control. To
reward shareholders, a 2.5 Scts final
dividend was announced, bringing
total dividend payout to 4 Scts (from
3.5 Scts).
Looking into 2013
Management sees a strong demand
pipeline for BBR although 1Q13
margins could be affected by one-off
demurrage charges as bad weather
earlier this year hampered materials
delivery. BBR margins are likely to
fall due to costlier raw materials
supply and a potential increase in
transport costs.
For shipping, the
positive operating momentum is
likely to continue into 2013 although
a full-fledged recovery is only likely in
2H14. Port operations should
continue to flourish as CXP regains
its market share in products handled
(pulp & paper, logs, steel).
Valuations
Based on the current price of S$0.92
and a market implied long-term
growth rate of 3.8% (CIMB c.3.6%),
we think that PUC’s growth potential
is priced in. Downgrade to Neutral. (Read Report)
Source : CIMB Research
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