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Thursday, December 1, 2011

FABER - An Arabian Nightmare (OSK)

The recognition of costs and impairment loss attributed to non-renewal of its IFM contracts in UAE led to Faber’s 9MFY11 results falling below our and consensus expectations. Nevertheless, the normalized results were largely in line with our expectation. Taking into account the costs and impairment loss from UAE, we have cut our FY11 net profit forecast by 65% while maintaining our FY12 forecast. Following the cut in our earnings forecast, our SOP-based FV is slashed from RM2.57 to RM2.24. However, given the sizeable upside, we keep our Trading Buy.

Other units doing well. Save for its business operations in UAE, the rest of its operations performed as expected. For 9MFY11, Faber’s IFM concession division reported a marginal increase in revenue y-o-y while its property division recorded a RM73.4m increase in revenue, or 2.2x higher y-o-y, attributed to higher progress billings from several property development projects launched.

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