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Broker's take: OCBC keeps 'buy' call on Libra

OCBC has maintained a "buy" call on Libra Group, with a fair value estimate of S$0.33.

Last month, Libra announced it had bagged S$11.3 million of mechanical and electrical engineering (M&E) contracts. This brings its year to date order book to an estimated S$105.6 million, OCBC said.

"We believe the group is on track to receive profit after tax and minority interests (PATMI) forecasts of S$4.7 million and S$7.8 million in FY14 and FY15 respectively."

Libra's latest awards were secured through its subsidiary Kin Xin Engineering. They include a S$6 million M&E sub-contract for a residence hall development in Nanyang Technological University (to be completed by January 2016), a S$4.2 million sub-contract for an industrial development at Sin Ming Road and a project for Ngee Ann Polytechnic worth S$1.1 million. The latter two are expected to be completed this year.

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As the group aims to increase market share for its coil resale business, some erosion in the segment's gross profit margin is expected, said OCBC.

But this should not be a cause for concern, it added. "We maintain our view on Libra's significant earnings growth potential underpinned by their strong M&E business. There is good value at current levels and we remain positive on Libra's growth prospects.

On Tuesday, Libra was trading unchanged at S$0.20.

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