by HARIZAH KAMEL / pic credit: ANNUAL REPORT
CHIN Hin Group Bhd is expected to post more robust results in the coming quarters, driven by construction and infrastructure projects undertaken by its associates.
Public Investment Bank Bhd (PublicInvest) noted the ongoing economic recovery would lift the integrated builder’s earnings in the near term, although the total lockdown measure is set to offset the momentum.
“While we expect subsequent quarters’ numbers to be stronger in tandem with more progressive economic recovery, this may be partly mitigated by the re-imposition of full lockdown measures by the government.
“We lift the financial year 2020 (FY22)/FY23 estimates by 34.5%/33.2% to account for recent/ soon-to-completion of the two listed companies,” the investment bank noted in a research note yesterday.
It is optimistic about Chin Hin’s prospects owing to the expected rollout of construction and infrastructure-related projects in the coming year, underpinned by increased contributions from its associates, Solarvest Holdings Bhd and Signature International Bhd, and the synergistic acquisition of Chin Hin Group Property Bhd.
PublicInvest has not accounted for the 20% share placement to fund the said acquisitions.
However, the investment bank viewed the corporate exercise as not immediately dilutive as the process is in stages.
PublicInvest has an ‘Outperform’ call on Chin Hin with a higher target price of RM1.35 from RM1.01 previously.
It said the group reported a strong net profit of RM14.4 million, up 961.3% year-on-year (YoY), in the first quarter ended March 31, 2021.
This was partly aided by RM7.22 million in disposal gains from the sale of Solarvest warrants.
Excluding this, its core net profit of RM7.8 million (+455.2% YoY) is still commendable and in line with expectations at 23% of the full-year forecast.
PublicInvest wrote that Chin Hin is optimistic to deliver a better result this year following the strong recovery in its preceding and current quarter performance despite the challenging business environment during the Covid-19 pandemic and the continued implementation of Movement Control Orders.
The group continued to initiate cost-cutting measures via digitalisation and automation office-wide and plant-wide to reduce its operation cost and stay competitive in the market.