• Revenue gained 20%y-y at S$40.3m, mainly due to more installation projects
• Malaysia, China and the Philippines. For the full year, revenue increased 13.6%y-y at S$151.7m, above our estimate by 8.4%.
• Gross margin for 4Q14 lower at 26.4%, partly due to incurrence of cost for a sizeable project and a reclassification of some expenses to COGS. However full year gross margin was higher at 31.2%, lifted by higher margins recognised in 2Q and 3Q.
• Key thing to note is that key operating margin EBIT improved from 9.1% to 11.8%.
• Both quarterly and full year net profits were higher y-y, 30% and 52% respectively, with FY14 earnings at S$13.9m, above our estimate by 2.9%.
• Final dividend declared at 3 cents per share, higher than 2 cents DPS for previous fiscal year.
• Maintain Accumulate with revised target price to S$0.72.

What is the news?

Lantro announced its full-year results on 20 th August 14. Higher revenue was attributable to more installation projects in Malaysia, China and the Philippines, contributing to higher installation works revenue at S$116.8m for FY14 (FY13: S$100m). Net profit for the quarter gained 30%y-y at S$3.1m while a fullyear net profit was > 50%y-y at S$13.9m. Though no surprises of special dividends, final dividend was raised to 3 cents per share, implying at least a potential dividend yield of 4.7% at current price.

Investment Action

We continue to be positive in our outlook for Lantro, in view of growing demand trend for data centres and quality structured cabling in Asia-Pacific region while remaining cautious on costs pressure that may arise from a tight labour market. We revise our 12-month target price to S$0.720, implying 11.6% capital upside and 7.8x FY15F PE ex-cash from current price. We maintain our Accumulate rating.

Source: Phillip Securities Research - 22 Aug 2014