Libra

Libra: OCBC initiates coverage on Libra Group as conviction BUY in the small-cap space with a fair value estimate of $0.33. Based on an analysis of this M&E specialist’s order book, upcoming FY14 earnings is forecasted to increase a whopping 8.4 times YoY (and 12.2 times over its last 3Y average) to $4.7m. Further forecast FY15 earnings to further grow 65.9% YoY to $7.8m as the new management team, who took over operations in 1Q14, continues to expand and position the company to capitalize on the healthy public construction outlook. Highlight that this under-the-radar company is already showing initial signs for an earnings upswing: 1H14 earnings had jumped 218.1% YoY to $3.0m. Believe Libra represents good value here at only 2.7x FY15 forward P/E (versus a peer average of 7.4x). In addition, the group’s dividend yield is forecasted to jump dramatically from 1.6% last year to 8.1% in FY14 and 9.7% in FY15. Fair value estimate of Libra is based on an undemanding 4.8x forward FY15 PE, which represents a 35% discount versus its peer average. Increased visibility of Libra’s earnings and dividends growth ahead will likely form compelling re-rating catalysts for its share price.