• S$21.6m awarded over last 2M
• Order book ~3x of FY13 revenues
• Positive contract win momentum

Awarded S$9.5m of M&E contracts

Last Friday evening, Libra announced that it has been awarded S$9.5m of M&E contracts, which brings its order book up to an estimated S$94.4m year-to-date. These latest contract wins comprise a S$5.4m M&E sub-contract for the supply, fabrication, delivery and installation of air-conditioning and mechanical ventilation system for a proposed condo project at Tampines St 86, and a S$4.1m sub-contract for the electrical, air-conditioning and mechanical ventilation system, building management system, and lab equipment for proposed additions and alterations involving the new erection of a teaching facilities building (Block 8A) at Temasek Polytechnic. The group has commenced work on the first contract, which is scheduled to be completed in Jul-16, and the second contract is expected to be completed in Aug-15.

Positive order book momentum so far

The current order book of S$94.4m is approximately 3.0x of last year’s revenues (FY13: S$31.5m) and represents good momentum for Libra which has announced S$21.6m of new contracts over the last two months. Management has indicated that the latest contract wins are expected to contribute to its earnings over FY14-15. That said, the rate of order book replenishment year to date is in line with our expectations, and we leave our FY14 and FY15 PATMI forecasts unchanged at S$4.7m and S$7.8m, respectively.

New management gaining traction

We believe the new management team is gaining traction in terms of growing business volumes and strengthening margins through active rationalization of business operations, while leveraging on tailwinds from the firm public construction outlook (forecasted at S$14b-18b per annum over FY15-16). Since our initiation on Libra as our top pick in the small cap space on 27 Oct, its share price has appreciated 7.5% to date and we continue to see value at current levels given significant potential for earnings and dividends growth ahead. Reiterate BUY with an unchanged fair value estimate of S$0.33.

Source: OCBC Research - 18 Nov 2014