- Fire fighting service & products manufacturing
- Property, construction & engineering
- Renewable energy
Obviously it was a good move.
With hot cash from property development, Fitters has set a minimum 30% dividend payout policy from FY2014.
As its high GDV (RM450mil) Setapak projects are near to completion (FY14Q3), I think it is not easy for Fitters to sustain its financial performance in FY14. It needs to keep launching more projects and achieve high take-up rate at the same time.
Fitters Quarterly Results By Segment
|Fire service revenue*||31.5||48.7||40.9||37.0||32.5|
|Fire service PBT||2.7||5.0||2.9||2.4||3.2|
So far Fitters has 3 major projects in the pipeline which are:
- Zeta D'Skye condominium @ Jalan Ipoh (GDV RM169mil)
- Zeta Eco Park @ Cyberjaya (GDV RM500mil)
- Zeta Residence @ Rawang (GDV RM300mil)
By looking at previous quarters' contribution from property, I think Fitters may face a slow down in property segment if no other projects are launched successfully within this year.
|Revenue growth %||15.0||-8.0||135.0||50.4|
|PAT growth %||40.5||25.3||68.0||65.0|
|Fire service revenue*||157.1||153.7||129.9||61.8|
|Fire service PBT||13.2||13.8||10.9||6.6|
Nonetheless, Fitters decided to diversify again.
Fitters is able to get pioneer status for the manufacturing of PVC-O pipes for a period of 8 years and is entitled to 100% tax exemption.
As Fitters holds 65% in Molecor (SEA), it will be a potential RM12mil annual net profit for Fitters. This is about 30% of overall FY13 net profit for Fitters.
The management said that it targets to double the pipe manufacturing revenue in the future after FY15 so its future contribution should not be overlooked.
Besides, Fitters plans to list its wholly-owned subsidiary in renewable energy Future NRG on Catalyst which is a sponsor-supervised board in Singapore. The earning contribution from this segment is only little.
Fitters's share price has gained more than 30% since we stepped into 2014, is it still undervalued?
FY13 is a fantastic year for Fitters in which its revenue and PATAMI rise 15% and 42% respectively YoY thanks to its property segment.
Base on FY13's PATAMI of RM39.2mil, its EPS will be 12.6sen which means it is only trading at a PE of 8.2x at current share price of RM1.03. Its latest net asset per share is at RM1.
Nevertheless, whether its property segment can keep up with previous year's performance remains a concern as explained above.
A good point is, its property project in Rawang is landed which should be more resilient in a soft property market.
Its development in Cyberjaya is still a mystery to me.
The new PVC-O pipe manufacturing segment is unlikely to contribute significantly in FY2014, and it is also not known how successful the management can secure contracts for it.
If this new business really can achieve the revenue level of its fire service by the end of FY15 and then double the figure later, then Fitters will be a true undervalued stock even though its property & other segment fail to grow.
But can Fitters achieve the target?
I better put it back into my stock alert list.