Review

• Ibraco’s 1H24 net profit of RM11.5mn fell short of expectations, meeting just 24% of our full-year forecast. This shortfall was mainly due to lowe rthan-anticipated contributions from the property development segment.
   
• YoY. 1H24 net profit decreased by 51% to RM11.5mn, mainly due to weaker Contributions From the Property Development and Quarry divisions, along with higher administrative, sales expenses, and increased interest costs.
   
• QoQ. 2Q24 net profit increased by 18% to RM6.2mn, primarily driven by Improved Performance in the Construction Division as the Pace Accelerated for Newly Secured Projects.

Impact

• We maintain our FY24-26 earnings forecasts, pending further updates from management in an analyst briefing later this week.

Outlook

• Future earnings are expected to be supported by unbilled sales of RM195mn and an outstanding construction order book of RM1.1bn. The group plans to launch RM1.6bn worth of projects in 2024-2025. Despite a robust order book, Ibraco's management remains proactive in pursuing additional building and infrastructure projects from both the public and private sectors.

Valuation

• No change to our SOP-derived TP of RM1.33/share. We remain optimistic about Ibraco’s strong foothold in Sarawak, which continues to drive solid property sales and secure construction projects with above-average profit margins. Maintain Buy.

Source: TA Research - 26 Aug 2024