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Thursday, June 20, 2013

Eversendai shares undervalued

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/19EVERS/Article/

TAN Sri AK Nathan, the founder of Eversendai Corp Bhd, says the company is undervalued by the market.

On a year-to-date basis, Eversendai shares, which are listed on the Main Market, are down by 12.35 per cent, while the all blue-chip FTSE Bursa Malaysia KLCI (FBM KLCI) is up by 17.67 per cent during the same period.

The slide in Eversendai's share price comes at a time when the broader market has been on a record-breaking feat this year, with the FBM KLCI surpassing the 1,700 points for the first time in its history.

Nathan owns 70.52 per cent of Eversendai, while the Employees Provident Fund and Lembaga Tabung Haji hold 8.52 per cent and 5.11 per cent stake in the company, respectively.

Eversendai shares closed at RM1.49 yesterday, while the FBM KLCI eased 1.170 points to end at 1772.88 points.

"The current share price does not reflect the company's true business potential and track record," said Nathan.

Data obtained from Bloomberg show that all the eight research firms that track Eversendai recommend investors to buy the stock.

However, the company's first-quarter results for the period ended March 31 2013 was a disappointment, with group level pre-tax profit dropping to RM24.45 million from RM31.25 million in the same period a year ago.

Nathan is optimistic of the firm reaching its RM2 billion revenue target and doubling its profit by 2017 .

"I foresee the company's net profit and revenue to increase progressively from 2014, driven by new building and construction projects and our venture into oil and gas. We are diversifying and moving into new territories such as eastern Africa and Australia," he said.

The company's outstanding order book is RM1.5 billion, which translates into 1.5 times fiscal year 2012 revenue and 1.3 times order book-to-market cap ratio.

Eversendai is in the process of bidding for structural steel, petrochemical and power plant construction jobs, and oil and gas fabrication worth up to RM8 billion. The projects are mainly in Azerbaijan, Saudi Arabia, Qatar, Oman, Dubai, Abu Dhabi, Sri Lanka, India, Singapore and Malaysia.

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