Top Story : Faber – Flying under the radar Outperform
New Coverage
- Faber Group is primarily focused in providing Integrated Facilities Management (IFM) to the healthcare and
non-healthcare industries, while maintaining a smallish presence in property development. Faber is a part
of UEM Group (32% shareholder), ultimately under Khazanah Nasional.
- For 9M09, approximately 84.1% of Faber's earnings are derived from IFM services. Faber is one of the
three companies that were awarded a concession agreement of 15 years (expiring in Oct 2011) to manage
non-medical hospital support services for 79 hospitals across Malaysia. We believe the concession
agreement will most likely be renewed given its political links, as well as its size and geographical reach.
- Property Development segment contributes approximately 14.4% for 9MFY09. Under its subsidiary Faber
Development Holdings, the company currently has few development projects across Klang Valley as well
as Kota Kinabalu. The company currently has unbilled sales of RM240m and approximately RM800m in
GDV which will last in 2013.
- Besides the concession, Faber also provides non-healthcare IFM services to both commercial and
residential properties in both public and private sectors. We believe Faber will continue to expand its nonconcession
given its ongoing expansion plans locally and overseas.
- We expect FY09 core EPS forecasts to drop by 14.0% due to lower property revenue offset by the
expansion in the IFM segment. However, as property development earnings recover in FY10-11 on new
launches, we have forecast corresponding EPS growth of 27.2% and 22.9% p.a. respectively.
- We have valued Faber based on sum-of-parts valuation and derived a fair value of RM2.49/share.
- Given its upside potential of 116.7% and net yield of 3.3%, we initiate coverage on Faber with an
Outperform call.