KUCHING: Vivocom Intl Holdings Bhd’s (Vivocom) results for its first quarter of financial year 2017 (1QFY17) have come in below expectations due to lower revenue recognition from projects.

In a filing on Bursa Malaysia, Vivocom announced that for the current financial quarter ended March 31, 2017, the group recorded profit before tax of RM8.6 million, compared to RM33.3 million.

Vivocom’s 1QFY17 earnings of RM5.2 million came in below the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) expectations.

“Its net profit accounted for 5.2 per cent of our full-year forecasts respectively,” MIDF Research said.

“The stark deviation was due to lower revenue recognition from projects due to progress billings and delays in certification of construction progress.”

MIDF Research made no variations to its assumption as the research arm believed that FY17/FY18 could be a better year for Vivocom to recognize the group’s billings for is orderbook level.

The research arm reckoned that in financial year ended 2017 (FYE17) Vivocom would struggle to maintain the group’s FY16’s profit margin of 14.7 per cent, because of its project profile i.e. public housing projects.

MIDF Research thus reaffirmmed its ‘buy’ recommendation with target price of RM0.40 per share based on discounted cash flow (DCF) with weighted average cost of capital (WACC) of 7.4 per cent.

The research arm’s target price implied an enticing 296 per cent upside backed by an undemanding current price earnings ratio (PER) of 9.5-fold.