RHB Securities 2015-08-18: Libra Group - 1H15 a Facade With Better 2H15 Ahead. Maintain BUY.

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LIBRA GROUP LIMITED 5TR.SI

1H15 a Facade With Better 2H15 Ahead

• 1H15 was disappointing mainly due to the fact that a bulk of revenue recognition of its Philips project will be done in 2H15. In addition, administrative expenses increased more than anticipated by 26.9%. 
• As a result, we lower our FY15F NPAT by 6.4%, resulting in a slightly lower TP of SGD0.26 (63% upside, 4.2x FY15 P/E). However, with a much better 2H15 backed by a strong potential 8.1% dividend, we think Libra is a steal at current price levels. Maintain BUY. 

 1H15 a facade, better 2H15 expected. 

• Libra recorded higher revenues across all business segments. NPAT, however, declined 25.5% YoY as a result of higher administrative expenses (+26.9% YoY) from headcount increment and the acquisition of Cyber Builders. Finance cost also surged 173.7% YoY to SGD0.53m, due to higher short-term loans and project financing. 
• Management expects a bulk of its revenue to be realised in 2H15 from the completion of the Philips project worth an estimated SGD46m. The project is expected to be completed in the next six months. 

 Dividend yield likely to be maintained or outperform. 

• Management remains bullish on its prospects and declared a 0.5 cent (SGD) dividend for 1H15. 
• Furthermore, 2H15 dividend is likely to be maintained at 2H14’s 0.7 cent, thereby maintaining a potential 8.1% FY15F dividend yield. 

 Robust orderbook of SGD120m and more. 

• As of Jun 2015, Libra had a strong orderbook of SGD120m, which covers our FY15 revenue estimate. Management expects orderbook to hit SGD150m by endFY15. 
• Furthermore, Libra also had an estimated SGD67m tenderbook as of Jun 2015. 
• Going forward, we expect the company to secure some of the tenderbook contracts and build its orderbook further given its full acquisition of Cyber Builders, which it expects to be upgraded to B1 grade by the Building and Construction Authority (BCA). 

 Maintain BUY with a new SGD0.26 TP (4.2x FY15 P/E). 

• Due to higher-than-expected administrative expenses, we lower our FY15 NPAT estimate by 6.4%, resulting in a slightly lower TP of SGD0.26 based on 4.2x FY15 P/E. 
• With a better 2H and a potential 8.1% yield, we maintain our BUY call on Libra.

Jarick Seet | http://www.rhbgroub.com/ RHB Securities 2015-08-18

BUY Maintain BUY 0.26 Down 0.30