Rotary Engineering’s order book to contract to $450m by 2013

The company's order book may decline from a peak of $1.3bn in 2009.

According to CIMB, with Rotary’s YTD slower-than-expected order intake of around S$70m, the analyst now pushes back its order recognition to incorporate a weaker 1H12, although CIMB is maintaining its order target of S$400m for FY11.

Here’s more from CIMB:

We also lower our gross-margin assumptions for project services in FY13 to 20% (from 21%). As a result, our earnings estimates for FY12-13 have been cut by 6-16%, while our target price drops to S$0.59, now based on 7x CY12 P/E, 20% below the 5-year peer average (previously S$0.90, 9x CY12 P/E, 5- year peer average) to reflect weak sentiment on small-mid caps and heightened earnings risks. We also downgrade Rotary to Underperform, expecting de-rating catalysts from weaker-than-expected orders and results.

• Declining order book. Even with an annual order intake of S$400m, we expect Rotary’s order book to contract to S$450m by 2013 from a peak of S$1.3bn in 2009.

• Most expensive among downstream EPC players. Across various valuation metrics, Rotary is the most expensive among downstream EPC players. After our earnings downgrade, it is trading at 7.5x CY12 P/E vs. a current peer average of 6.8x. Excluding net cash, it is trading at 6.8x (though multiple could drop upon the collection of receivables) vs. the peer average of 3.7x. With comparable ROEs, the stock is also trading at 1.2x CY11 P/BV, the highest among peers. Such rich
valuations could pose the biggest downside risks for the stock, in our view.

Also Read

Institution of Engineers sets up new board to promote faster chartership registration

Hanwha raises offer to $0.67 to acquire full control of Dyna-Mac Holdings

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit

Top News

Vibrant Group wins suit against Blackgold Australia

The group shall be paid damages and fees by Blackgold Australia’s ex-CEO and ex-chairman.

Lorem Ipsum text in year 2025

Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old.

Agribusiness

Lorem Ipsum is simply dummy text of the printing and typesetting industry.

Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of "de Finibus Bonorum et Malorum" (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, "Lorem ipsum dolor sit amet..", comes from a line in section 1.10.32.

Agribusiness

Secondhand furniture gains traction as Singaporeans embrace circular economy practices