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Sunday, January 21, 2018


Its share price rise (Till 19 Jan 2018) could be a positive reaction by the market to the group’s results for the second quarter ended Nov 30, 2017 (2QFY18), which saw net profit jump by more than 46 times to RM6.54 million from RM141,000 in 2QFY17. Revenue increased by almost 15 times to RM147.3 million.

The reason for the big rise in profit and revenue is the inclusion of the earnings of Wira Syukur (M) Sdn Bhd, a construction firm which was injected into Vizione as part of a RM280 million reverse takeover exercise that was completed on Oct 9 2017.

In mid Jan 2018 Vizione — for-merely known as Astral Supreme Bhd — proposed a private placement of up to 406.71 million shares. Based on an assumed price of 16.5 sen per share, the placement is expected to raise up to RM67.11 million in gross proceeds, part of which will be used to fund construction projects.

To put things into perspective, Vizione’s net cash position (minus borrowings and finance lease liabilities) stood at RM25.9 million as at Nov 30, 2017, while its gearing ratio was at 0.06 times.

Vizione managing director Datuk Ng Aun Hooi is positive about the group’s prospects for financial year 2018 (FY18) onwards. He said the group is projecting a revenue of about RM800 million for FY18. Vizione’s order book at present (Mid Jan 2018) stands at RM3.3 billion, and out of this it is expecting to recognise RM800 million as revenue for FY18 and has a target to replenish its order book by at least RM1.2 billion in 2018.

Projects making up this order book include jobs awarded by KL Northgate Sdn Bhd for the construction of apartments, shops and offices worth RM1.12 billion, the construction of office suites for Paragon Hemisphere Sdn Bhd worth RM401 million as well as a RM465 million contract awarded by Hektar Aneka Sdn Bhd for the construction of Rumah Mampu Milik Wilayah Persekutuan.

Also making up its order book are contracts awarded by the federal government for the development of public housing schemes in states such as Kelantan, Kedah, Sabah and Terengganu which amount to about RM947 million.

Government jobs are in fact formed the majority of jobs taken up by Wira Syukur, a company which he formed with two other partners in 1996. Building affordable homes, including in government housing schemes, have proven to be a recession-proof model. Wira Syukur had managed to pull through economic down-turns such as 1997 to 1998 Asian financial crisis.

With Wira Syukur integrated into Vizione, Vizione would continue its bid for government jobs … increase its focus on infrastructure construction jobs rather than property construction jobs. Infrastructure jobs have better margins than property construction.

The group at present is tendering for both property and infrastructure jobs in Sabah, Kuala Lumpur and Negeri Sembilan. The group’s tender book size is about RM2.9 billion.

Wira Syukur’s — and now Vizione’s — forte is in the construction of affordable homes would eliminate the need for imports of materials which are usually needed for highend housing projects.

Looking at Vizione’s 2QFY18 financials, the net profit excluding one-off expenses such as corporate exercise and employee share option scheme expenses amounts to RM9.17 million, resulting in a net profit margin of 6.2%.

Imputing an expected revenue of RM800 million for FY18 and a net profit margin of 6.2%, and assuming a maximum enlarged share capital of 4.47 billion shares post placement, Vizione could be looking at a projected FY18 forward PE of 14.9 times based on 16.5 sen.

The FY18 forward PE valuation is higher than that of some construction players such as Pesona Metro Holdings Bhd (nine times) and Mitrajaya Holdings Bhd (6.3 times), but lower compared with others like Gabungan AQRS Bhd (17.5 times).

In terms of its order book size, Vizione’s RM3.3 billion as at mid Jan 2018 seems to be on a par with, or higher than, its peers. Pesona Metro’s order book stood at RM1.6 billion as at Sept 30, 2017. Mitrajaya reported an order book of RM1.69 billion as at Sept 30, 2017 and Gabungan AQRS’s order book amounted to RM2.58 billion as at Nov 16, 2017.

If Vizione can deliver on its earnings and keep its margins in check, it could be one of the construction stocks to look out for in 2018.

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