FajarBaru ... Apr10

- Not entirely negative to Fajarbaru. News that Bina Puri Holdings and UEM may win the RM1b LCCT terminal contract should not be viewed too negatively on Fajarbaru. As the contract has not been awarded and Malaysian Airports have not made any official announcement on which shortlisted-prequalified contracts have been dropped from the bid for the terminal building, there is still a chance that Fajarbaru may secure the
contract or part of it.

- Healthy order book at c. RM450m until CY2012. At present, Fajarbaru is tendering another RM700m worth of contracts with a mix of government and private projects including parking apron works for Malaysia Airports. We expect contract award to be announced in the coming months. Ongoing projects including Double Track Railway, Tampin Hospital and shrimp farm at Terengganu are currently on track while project margin is expected to be a favourable c. 6% to be recognised until CY12.

- Still bidding for the remaining LCCT projects worth about RM300m to RM400m. Apart from the potential RM1b LCCT contract award, Fajarbaru is still bidding for the remaining LCCT contract including parking apron and other small scale structures worth about RM300m to RM400m. We also believe Fajarbaru stands a chanc e to secure sub -contracts from the LCCT contract winners.

- BUY maintained with lower TP RM1.32. (Previously RM1.61). Overall slowdown in awarding major contracts, will slowdown the growth of the construction sector. The intense competition has reduced bid-award strike rates substantially. We revised down our FY10 and FY11 earnings by 24% and 3% respectively, factoring in slower progressive recognition of works and delays in award of new contracts. We still pegged Fajarbaru at 10x PE to FY10 EPS yielding a lower TP at RM1.32.