Fitters- profit from property development starts to roll in

Results Update

For QE31/12/2012, Fitters's net profit rose 117% q-o-q or 43% y-o-y to RM10 million while revenue rose by 15% q-o-q or 6% y-o-y to RM114 million. The improved bottom-line was due to increase in sales of the LOFT service apartment in Zetapark, Setapak which was launched in November 2011.



Table 1: Fitters's last 8 quarterly results

From Table 2 below, we can see that Construction, Engineering & Property segment is the most important segment in the group, accounting for 83% of its pre-tax profit & 41% of its revenue. The bulk of the recent increased revenue & pre-tax profit came from its Zetapark project in Setapak where the estimated GDV is about RM600 million. For more on this, go here.

It is doubtful whether Fitters will be able to repeat this strong performance after the completion of the Zetapark project as it does not have any significant landbank besides the Setapak land. The only undeveloped land it has is a 20-acre agricultural land in Cameron Highland. Hopefully it can replenish its landbank during the interim period or its investment in renewal energy projects starts to show good results.


Table 2: Fitters''s Segmental Results for the past 4 years


Chart 1: Fitters's last 18 quarterly results

Financial Position

Fitters' financial position as at 31/12/2012 is deemed satisfactory. Its current ratio stood at 2.33 times while gearing ratio is low at 0.15 time. Cash in hand amounted to RM41 million.

Valuation

Fitters (closed at RM0.565 yesterday) is now trading at a PE of 4.4 times (based on last 4 quarters' EPS of 12.7 sen). At this PE, Fitters is deemed fairly attractive.

Technical Outlook

Fitters has been sliding for the past 18 months, dropping from a high of RM1.15 to the current price of about RM0.56-0.57. It has gone below the horizontal support of RM0.58, which happens to be the long-term uptrend line. Its technical outlook is negative.


Chart 2: Fitters's weekly chart as at Mar 6, 2013_12pm (Source: Quickcharts)

Conclusion

Based on good financial financial performance and attractive valuation, Fitters could be a stock for long-term investment. Despite these positive factors, Fitters may not attract much interest as the technical outlook is negative. However, for those who are stuck in this stock due to my earlier call, a slow accumulation at the present price may be a good idea.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Fitters.