PETALING JAYA: Shares of Benalec Holdings Bhd fell to a record low of 94 sen, below the company’s initial public offering of RM1 following the announcement of a disappointing first quarter ended Sept 30 financial results.
The counter closed 7 sen, or 6.9%, lower with 14.3 million shares done. The counter has been on a downtrend in the week ahead of the release of the company’s quarterly results.
In the first quarter, Benalec posted a net loss of RM4.65mil compared with a net profit of RM22.79mil a year ago. Revenue fell 75% to RM14.40mil from RM57.75mil.
CIMB Investment Bank Bhd analyst Sharizan Rosely said Benalec’s annualised first quarter core net loss was lower than the research house and consensus full-year net profit estimate of RM77mil.
“This was a negative surprise. The loss was because zero land sale gains were recognised. The results were below expectations as we had overestimated margins and the timing of land sale gains,” he said.
Sharizan said the company’s revenue plunged 75% year-on-year in the first quarter, also due to delays in reclamation works. “Management said reclamation costs were rising, suggesting that our full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) margin assumption of circa 50% is not achievable. The absence of dividends was not a surprise.”
“Incoming land sale gains from the group’s Malacca project will drive profitability in the coming quarters. The group is targeting to monetise 181 acres over the next three quarters at an indicative price of RM38-RM39 per sq ft, with 35%-40% EBITDA margins, based on our estimates,” he said.
Analysts at Kenanga Investment Bank Bhd said the major disappointment was mainly due to slower-than-expected marine construction work progress for the quarter and also the delayed recognition from the sale of circa 180 acres, which is expected to contribute from the second quarter of FY2014 onwards.
“Despite the recent concern over the group’s corporate governance issue and poor performance on its earnings, the outlook on its Johor project remains intact as talks with 1MY Strategic Oil Terminal Sdn Bhd have been progressing well. However, we do not exclude the possibility there would be another time extension beyond its upcoming expiry on Dec 11 in order to fine-tune details of this particular mega project before it could be concluded,” the analysts said.
Meanwhile, BIMB Securities analysts said the company came in largely below the house’s expectation. The analysts would be cutting earnings projection for FY14 and FY15 by 35.9% and 13.3% respectively.