SIGN (7246) : Signature International - Gaining momentum
Target RM3.12 (Stock Rating: ADD)
Signature’s 1QFY6/15 core net profit was above our expectations, at 114% annualised, mainly due to stronger topline growth. We raise our FY15-17 EPS by 18%-25% to reflect the stronger topline growth. With the year-end just ahead, we roll our valuation to CY16 EPS, lifting our target price, still based on 30% discount to SOP (the discount to reflect its small cap and tight trading liquidity). The stock remains an Add and potential re-rating catalysts include securing more major contracts and further profit margin expansion.
1QFY15 net up 235%
1QFY15 revenue surged 120% yoy but net profit growth was even stronger at 235%. This was due to stronger topline growth and greater economies of scale. Signature also saw contribution from its newly set up interior fit-out division (RM11.3m 1QFY15 revenue and RM1.4m EBIT). No interim DPS was declared, in line with our expectations. 1QFY15 EBITDA margin was 13.7% compared with 11.5% in 4QFY14, an indication of better cost control measures and improving economies of scale.
Record order book
Signature’s outstanding order book is at a record high of just above RM250m. Jobs secured this year should be even stronger than last year. The next few years will be very exciting for the company, with group revenue expected to peak only in 2017. Properties that were sold in 2013 would see delivery in 2016/17. Being the industry’s dominant player, the company is poised to handle most of the industry’s major contracts. We target order book to increase by a record RM300m this financial year.
Expansion plans
In Sep 2014, Signature proposed to acquire 39 acres of industrial land in Bandar Baru Enstek (near KLIA) for RM50.8m or RM30psf. The company plans to move its existing production facilities from its current Kota Damansara (KD) factory. This makes business sense given that KD is strategically located in the Klang Valley and the land there is worth around RM300psf. We believe Signature is looking to maximise the potential of its 7.3 acres KD land. At RM300psf, the land alone is worth RM95m or RM0.79/share. The company will hold its 1QFY15 briefing this Wednesday.
Source: CIMB Daybreak - 25 November 2014
Target RM3.12 (Stock Rating: ADD)
Signature’s 1QFY6/15 core net profit was above our expectations, at 114% annualised, mainly due to stronger topline growth. We raise our FY15-17 EPS by 18%-25% to reflect the stronger topline growth. With the year-end just ahead, we roll our valuation to CY16 EPS, lifting our target price, still based on 30% discount to SOP (the discount to reflect its small cap and tight trading liquidity). The stock remains an Add and potential re-rating catalysts include securing more major contracts and further profit margin expansion.
1QFY15 net up 235%
1QFY15 revenue surged 120% yoy but net profit growth was even stronger at 235%. This was due to stronger topline growth and greater economies of scale. Signature also saw contribution from its newly set up interior fit-out division (RM11.3m 1QFY15 revenue and RM1.4m EBIT). No interim DPS was declared, in line with our expectations. 1QFY15 EBITDA margin was 13.7% compared with 11.5% in 4QFY14, an indication of better cost control measures and improving economies of scale.
Record order book
Signature’s outstanding order book is at a record high of just above RM250m. Jobs secured this year should be even stronger than last year. The next few years will be very exciting for the company, with group revenue expected to peak only in 2017. Properties that were sold in 2013 would see delivery in 2016/17. Being the industry’s dominant player, the company is poised to handle most of the industry’s major contracts. We target order book to increase by a record RM300m this financial year.
Expansion plans
In Sep 2014, Signature proposed to acquire 39 acres of industrial land in Bandar Baru Enstek (near KLIA) for RM50.8m or RM30psf. The company plans to move its existing production facilities from its current Kota Damansara (KD) factory. This makes business sense given that KD is strategically located in the Klang Valley and the land there is worth around RM300psf. We believe Signature is looking to maximise the potential of its 7.3 acres KD land. At RM300psf, the land alone is worth RM95m or RM0.79/share. The company will hold its 1QFY15 briefing this Wednesday.
Source: CIMB Daybreak - 25 November 2014
