CONSTRUCTION BENALEC HOLDINGS (BHB.MK) 30 December 2010 A sea change – premium land creation Company report FAIR VALUE: RM1.90 Hoy Ken Mak
[email protected] +603 2036 2294 Rationale for report: Initial public offer Investment Highlights IPO Price RM1.00 Fair Value RM1.90 52-week High/Low n/a • We initiate coverage on Benalec Holdings Bhd with a BUY, and a sum of parts-derived fair value of RM1.90/share. Key Changes Benalec is to be listed on Bursa Malaysia on 17 January Fair value n/a 2011 with an initial public offer price of RM1.00/share. EPS n/a • Benalec is a marine engineering specialist on the YE to June FY10 FY11F FY12F FY13F ascendancy. It enjoys an 18% share of the Malaysian marine Revenue (RMmil) 116.5 250.6 345.7 406.1 construction market dominated by only five major active Core net profit (RMmil) 50.6 92.6 118.8 141.1 players. Hence, Benalec should trade at a scarcity premium EPS (Sen) 8.0 12.7 16.3 19.3 – the closest peer Hock Seng Lee Bhd trades at FY11F-12F EPS growth (%) n/m 57.9 28.3 18.7 PEs of 8x-10x vs Benalec’s 6x-8x (at IPO price of RM1.00). Consensus EPS (Sen) n/a n/a n/a DPS (Sen) 0.0 2.5 6.5 8.0 • Benalec prides itself as an integrated marine engineering PE (x)* 12.4 7.9 6.1 5.2 EV/EBITDA (x)* 9.7 5.9 4.5 3.7 outfit operating in a niche market – including ownership of Div yield (%)* 0.0 2.5 6.5 8.0 91 vessels.