SIGN (7246) - Signature International - Record quarter for the company
Target RM4.23 (Stock Rating: ADD)
Signature’s 1HFY06/15 core net profit came in above our expectations at 132% annualised, mainly due to stronger-than-expected topline growth and greater economies of scale. 2Q15’s RM12.1m net profit was the best ever quarterly results for the company. We raise our FY15-17 EPS forecasts by 45-54% to reflect higher revenue growth and greater efficiency. Our higher target price is based on an unchanged 30% discount to SOP (the discount to reflect its small cap and tight trading liquidity). Potential re-rating catalysts include securing more major contracts and continued profit margin expansion. The stock remains an Add.
1HFY15 net profit up 208% yoy
1HFY15’s revenue was up a strong 87% yoy and 1H15’s net profit growth was a stronger 208%. Excluding the RM3.1m write-back in 2Q15, 1H15 core net profit growth was still an impressive 157% yoy. 1HFY15’s EBITDA margin was 18.6% (compared to 1HFY14’s 13.9%) mainly due to greater economies of scale from higher top-line contribution. No interim DPS was declared, in line with our expectations. The company usually pays dividends at the end of the financial year.
Orderbook above RM200m
New job orders are more than sufficient to sustain its monthly outstanding order book at consistently above RM200m. Since mid-2014, the company’s top-line has been growing from strength to strength (refer to Figure 2) and this trend should continue for a few more years. We are only looking at its earnings to peak earliest in 2017 or in 2018 if there are delays in delivery by the property developers.
Attractive dividend yields
Continue to accumulate this stock. Signature’s quarterly earnings have hit the sweet spot this quarter with core net profit just below RM10m and EBITDA margin above 20%. Continued strong top-line growth and greater economies of scale should see a record profit year in FY2015 and this growth should sustain over the next few years. After our EPS upward revision, the stock valuation is extremely attractive at only at 2015 5.4x P/E. We believe Signature’s share price is due for a major re-rating in the coming months. In addition, dividend yields for this stock are attractive, currently above 6%.
Source: CIMB Daybreak - 16 February 2015
Target RM4.23 (Stock Rating: ADD)
Signature’s 1HFY06/15 core net profit came in above our expectations at 132% annualised, mainly due to stronger-than-expected topline growth and greater economies of scale. 2Q15’s RM12.1m net profit was the best ever quarterly results for the company. We raise our FY15-17 EPS forecasts by 45-54% to reflect higher revenue growth and greater efficiency. Our higher target price is based on an unchanged 30% discount to SOP (the discount to reflect its small cap and tight trading liquidity). Potential re-rating catalysts include securing more major contracts and continued profit margin expansion. The stock remains an Add.
1HFY15 net profit up 208% yoy
1HFY15’s revenue was up a strong 87% yoy and 1H15’s net profit growth was a stronger 208%. Excluding the RM3.1m write-back in 2Q15, 1H15 core net profit growth was still an impressive 157% yoy. 1HFY15’s EBITDA margin was 18.6% (compared to 1HFY14’s 13.9%) mainly due to greater economies of scale from higher top-line contribution. No interim DPS was declared, in line with our expectations. The company usually pays dividends at the end of the financial year.
Orderbook above RM200m
New job orders are more than sufficient to sustain its monthly outstanding order book at consistently above RM200m. Since mid-2014, the company’s top-line has been growing from strength to strength (refer to Figure 2) and this trend should continue for a few more years. We are only looking at its earnings to peak earliest in 2017 or in 2018 if there are delays in delivery by the property developers.
Attractive dividend yields
Continue to accumulate this stock. Signature’s quarterly earnings have hit the sweet spot this quarter with core net profit just below RM10m and EBITDA margin above 20%. Continued strong top-line growth and greater economies of scale should see a record profit year in FY2015 and this growth should sustain over the next few years. After our EPS upward revision, the stock valuation is extremely attractive at only at 2015 5.4x P/E. We believe Signature’s share price is due for a major re-rating in the coming months. In addition, dividend yields for this stock are attractive, currently above 6%.
Source: CIMB Daybreak - 16 February 2015
