Rotary

Rotary: CIMB has an unrated report. House note that with the loss-making SATORP project coming to an end and backed by a robust order book of S$1bn, Rotary’s turnaround has begun. The lessons learnt from SATORP’s failure will lead to prudent selection of projects and attention to cost management. Rotary’s current outstanding order book is $1n. Most of these projects are similar to those Rotary has successfully delivered before. The order book provides topline visibility into FY14-15. Although new order opportunities are now limited in Singapore, there are other major opportunities in the US$620m RAPID package in Johor, Malaysia, as well as in the Middle East. Despite losses of $80.4m in FY12, Rotary remains financially strong with a net cash position of $98.7m (27% of mkt cap) as at end-Sep 13. With no sizeable capital expenditure foreseeable in the next few years, house believes the historical dividend payout ratio of 35% should continue.