TA Research raises Bina Puri's earnings outlook

KUALA LUMPUR: TA Research has raised its earnings forecasts for Bina Puri Holdings Bhd for the financial years ending Dec 31, 2016, and 2017 by 3.6% and 2.8%, respectively, after the latest job win by the construction group.

Subsequent to the earnings revision, the brokerage tweaked its share-price target for Bina Puri higher at 38 sen from 37 sen previously, based on an unchanged valuation of seven times the projected earnings per share for 2016. 

“The order book replenishment has been encouraging with a total of RM932.9mil new orders secured year to date,” TA Research said in its report on Bina Puri.

“Therefore, we raise our order book replenishment assumption for 2015 from RM1bil to RM1.1bil,” the brokerage explained.

TA Research said it would maintain its “hold” recommendation on Bina Puri, given the total potential return of 12.7%, including an expected dividend yield of 5.6%.

Bina Puri on Thursday announced that it had secured a RM94.94mil contract for civil works in a steam cracker complex within the site of Petronas’ RM60bil Refinery and Petrochemical Integrated Development (RAPID) Project in Pengerang, Johor. 

The job, awarded by Toyo Engineering & Construction Sdn Bhd, was the sixth construction job win for Bina Puri this year. It was scheduled for completion within 27 months from January 2016. 

“Assuming a pre-tax profit margin of 3%, the project is expected to contribute RM2.1mil in net profit or one sen per share throughout the construction period,” TA Research said.

Bina Puri’s outstanding construction order book at present stood at about RM2.7bil, about 3.3 times the group’s 2014 construction revenue.