Libra

Libra: Won a collective $11.3m of M&E contacts. YTD order book estimated at $105.6m, the group is on track to achieve PATMI forecast of $4.7m and $7.8m in FY14/15 respectively. The latest awards, secured through its subsidiary Kin Xin Engineering, include a S$6m M&E sub-contract for a residence hall development in Nanyang Technological University (to be completed by Jan-16), a S$4.2m sub-contract for an industrial development at Sin Ming Road as well as similar works for Ngee Ann Polytechnic Block 22 worth $1.1m (latter two to be completed this year). As the group aims to increase market share for its coil resale business, we would likely see some erosion in the segment’s gross profit margin (FY13: 20.9%). This should not be a cause for concern as OCBC maintains view on Libra’s significant earnings growth potential underpinned by their strong M&E business. OCBC thinks there is good value at current levels and we remain positive on Libra's growth prospects. The house maintains BUY with an unchanged fair value estimate of $0.33.