Epure ever hit a high of $2.52 and private placement to
institutional dealers were between $2.16 to $2.20 and Epure is now
cash rich and
dividends paying too [/quote
Epure International Ltd (Buy; S$0.50; EPUR
SP)
First batch of orders for 2008
Price Target: 12-Month S$ 1.07
By: Wee Lee Chong +65 6398 7971
Story: Epure announced that it has won RMB257m worth of
consolidated EPC
contracts for wastewater treatment systems in the past months in
China. The
contracts are secured and being finalised for signing. These latest
batch
of contracts win can be broken down into: 1) Four industrial
contracts (one
in Tianjin and three in Tangshan), worth RMB55m. Target completion
dates
are in 4Q 2008, and 2) Three municipal contracts (one in Ezhou and
two in
Hubei), worth RMB202m. Target completion dates are in the 4Q 2008
to 1Q
2009 periods.
Point: We believe that this order book update should alleviate
concerns on
its lack of new order news flow y-t-d in 2008. Epure’s current
order book
is RMB435m, which implies that about RMB178m orders were carried
forward
from 2007. Our net profit projection stays at RMB275m in
FY08, assuming
RMB900m new orders win in 2008.
This latest batch of contracts also reaffirms our view that the
lack of
news flow till last week is a matter of timing issue, especially
when Epure
has the habit of announcing new contracts win in batches (vs.
individual
contract announcements). Given China’s increasing focus and
stricter rules
on environmental issues, and Epure¡¯s position as one of the more
recognised
EPC player for wastewater treatment systems
in the PRC, we are anticipating
more orders flow in the months ahead.
Relevance: Our fair value for Epure is S$1.07, after adjusting
for its
recent 1-into-3 shares split, and using 25x FY08
PE. We reckon that Epure
deserves the scarcity premium as one of the few fundamentally
performing
SGX-listed water play. Epure has also
declared net dividend of 2 Scents per
pre-split share for FY07. On a post share
split basis, the net dividend per
share is about 0.07 Scents. Maintain BUY.Even
better is Epure is going to pay 0.08 cents ex date 18May…payable
29May..evidence of its cash on hand status unlike other S chip and
with contracts worth >1 $ Billion,Epure is set to soar so don’t
miss the boat