Engtex Group Bhd

Engtex Group Bhd

Postby winston » Sat Jan 04, 2014 6:57 pm

not vested

A successful consolidation of the Selangor water industry could lead Engtex, already the country’s largest pipe maker by market capitalisation, even higher.

Going into its sixth year of stalemate, water talks have been gaining fresh traction since last year.

Already, the Engtex stock has reflected this, doubling last year to reach a high of RM1.78. It has since come off a little, last trading at RM1.61.

As the newly-structured water industry should involve the long-overdue replacement of the country’s aging water pipelines, Engtex by virtue of its track record and expertise is bound to get a slice of this.

Engtex chief financial officer Khoo Chong Keong in a recent interview with StarBizWeek said of the 130,000km of pipes in Malaysia, a third were made of asbestos cement, which has been known to cause cancer.

Assuming that just half of the asbestos cement pipes are replaced with mild steel and ductile iron pipes, the industry is looking at a potential RM5bil market.

Meanwhile, the Langat 2 project, which is crucial to the state’s impending water crisis, will also require some 50,000 tonnes of pipes worth RM200mil.

Engtex is touted as a frontrunner to clinch pipe supply jobs for Langat 2.

There is also Petronas’ Rapid project which will require some RM200mil worth of pipes.

On the east coast, Engtex is targeting some RM100mil in pipe orders for Kuantan Port City, a RM4bil industrial and logistics hub to be developed by 2020.

On top of these, some RM800mil in new pipes for housing projects and mega projects such as Johor’s Iskandar Malaysia is needed annually, Engtex revealed.

For its third quarter ended Sept 30, Engtex reported a net profit of RM10.4mil against a net profit of RM7.7mil for the same period a year ago.

For the nine months ended Sept 30, it had made a net profit of RM38.5mil against a net profit of RM30.3mil in 2012.

Maybank IB in a July report predicted that Engtex would make some RM42mil in net profit for its FY13 and RM48.4mil thereafter.

Catalysts

- Highly news-driven stock, poised to enjoy spillover effects in the event there is closure for the Selangor water consolidation industry.

- High potential for jobs given healthy flow of infrastructure projects.

Risks

- Do not secure the anticipated contracts.

- High capex requirements in the near-term, possibly capping dividend payouts.


Source: The Star
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston
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Re: Engtex Group Bhd

Postby winston » Fri Feb 02, 2018 9:26 am

vested

Trading idea: Engtex is a good defensive play due to its earning resilience (FY17-19 earnings CAGR of 16%) in wake of external volatility, riding on the mega water infrastructure projects as well as nationwide pipe replacement projects.

Valuation is cheap at 7.8x FY18 P/E with dividend on the rise ~3.7-4.6% for FY18E-19E from 1.2% in FY17E.  

Technically, the stock is pending a sideways consolidation breakout.

A decisive break above RM1.14 would spur prices higher towards RM1.17-RM1.24 zones before reaching our LT target at RM1.29.

Key supports are RM1.07 (17/18/19 Jan low) and RM1.06 (lower Bollinger band). Cut loss at RM1.03.

Source: HLB
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Re: Engtex Group Bhd

Postby winston » Fri Feb 02, 2018 9:30 am

vested

Dec 11, 2017

Investment case:

One-stop solution provider in building materials with strong distribution network;
Experienced management team with expertise in water pipe manufacturing;
Primary beneficiary from mega water infrastructure projects; and
Undemanding valuation.

Key Risk:
Delay in the progress of pipe replacement projects;
Escalation of raw material cost; and
Further slowdown in property market.

Forecast
We estimate the company’s FY17 core net profit to contract by -7.5% to RM54.8mn due to expected lower contribution from the wholesale and distribution segment but we forecast the group to achieve core profit growths of 10.1% and 13.6% to RM60.3mn and RM68.4mn for FY18 and FY19 respectively, supported by expected improvement in utilization rate for Ductile
Iron Pipes and Cement-lined Mild Steel Pipe as well as declining financing cost.

In addition, the newly set-up Electric Resistance Welded Pipe plant and steel rolling mill should start contributing to the earnings in CY18.

Valuation

We initiate coverage on ENGTEX with a target price of RM1.38, based on 10x CY18 earnings. With an upside of 26.6%, we recommend a BUY call on ENGTEX.

Source: TA Securities
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Re: Engtex Group Bhd

Postby winston » Fri Feb 02, 2018 9:58 am

not vested

Nov 24, 2017

Valuation & Recommendation

Below expectation - 9M17 net profit dropped 10% YoY to RM42.3m and achieved 68% of our full year forecast which is below expectation. Meanwhile, nine months’ revenue shed 1% YoY to RM798.76m and was within expectation after making up 73% of our FY17 forecast.

As such we are reducing our FY17 and FY18 EPS estimates by 16.5% and 14.6% respectively to account for higher-than-expected production costs and tax rate.

Currently, Engtex is investing in a new steel pipe plant in Kuantan and a steel mill plant in Melaka which will commence operations in 1Q18.

Meanwhile, the sales of completed residential and commercial units in Selayang as well as ongoing development of Amanja serviced apartments in Sri Damansara are expected to
contribute to its property development division. On future projects, Engtex has earmarked two landbanks for development in Gambang, Pahang and Kuang, Selangor.

On the hospitality side, its third hotel Mercure Hotel in Selayang started operations in October.

We are maintaining our BUY call with a lower target price of RM1.36 (previously RM1.60) based on FY18F EPS with forward PER of 10.2 times, based on industry peer average. This translates into a potential upside of 19% against its current share price.

Source: JF Apex
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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