April 22, 2012

Some analyst report on Fitters

Buy for quantum leap ahead

• Proxy to renewable energy with promising growth prospects
• Riding on booming theme parks in Asia; Shanghai Disneyland is the wild card
• Initiate with BUY and RM1.25 TP (66% upside)

Under-researched bargain.
We initiate coverage of Fitters with RM1.25 TP based on SOP methodology. Fitters is a underresearched jewel with no broker coverage at the moment. Its current valuation at only 5x FY13 PE is a clear bargain on the back of 3-year earnings CAGR of 38% while boasting solid 19% FY13 ROAE. Balance sheet is healthy with 22% net gearing as at Dec11. FY13 is set to be a record year, premised on: (i) property development progressive billing, (ii) palm oil mill capacity upgrade to 90MT/hr (from 60MT/hr), (iii) commercialisation of green mill.

Huge potential in renewable energy.
Fitters is the market leader of integrated fire-fighting business in Malaysia, that manufactures, trades and provides installation services. However, renewable energy has been identified as the next growth driver. Fitters has commercialised its concept of sustainable palm oil mill by providing zero-waste solution via dried long fiber plants and biogas power plants. Its strong value proposition of additional income from palm oil wastes and relatively short pay-back period of 4-5 years, is highly attractive. Securing new green mill projects will be the immediate catalyst for Fitters.

Shanghai Disneyland the wildcard.
Shanghai Disneyland specialist theme works worth >RM100m is a potential catalyst given Fitters’ approved vendor status. Malaysia booming theme park development in Johor also provides huge untapped market.

Extra boost from property.
Maiden property development project in prime Setapak area (GDV RM400m) will be a major boost to FY12-14 earnings amid strong take up for its SOHO (100%), anchored by unbilled sales of RM120m as at 1Q12.

At A Glance
Issued Capital (m shrs)    216
Mkt. Cap (RMm/US$m)    163 / 53
Major Shareholders         Dato' Wong Swee Yee (%) 32
Free Float (%)               67
Avg. Daily Vol.(‘000)       867

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