Highlights

Hock Seng Lee - First Job Win in FY18

Date: 15/08/2018

Source  :  HLG
Stock  :  HSL       Price Target  :  1.38      |      Price Call  :  HOLD
        Last Price  :  1.55      |      Upside/Downside  :  -0.17 (10.97%)
 


HSL has secured a new contract from Petronas worth RM101.19m for construction of MARA Junior Science College campus in Bintulu. The works are expected to commence on September 2018 and be completed in 36 months. Order book is now estimated at RM2.5bn, implying a cover ratio of 5.8x. While these job wins are positive, we remain cautious on the macro job flow outlook following the new government’s review on mega projects. Forecast unchanged as YTD job wins are still within our target. Maintain HOLD, TP: RM1.38 (10x mid FY19 P/E).

NEWSBREAK

MARA campus contract. HSL announced that it has been awarded a new contract from Petronas worth RM101.19m for construction of MARA Junior Science College campus in Bintulu. The works are expected to commence on September 2018 and will be completed in 36 months.

HLIB’s VIEW

First job win in FY18. With this job in the bag, we estimate HSL’s total orderbook to now stand at RM2.5bn. This translates to a healthy cover of 5.8x on FY17 construction revenue. This construction job is HSL’s first job win for the year, which pretty much mirrors the rather slow momentum of job flows across the board.

Cautious on job flow outlook. While these contract wins are positive, we remain cautious on the overall macro job flow outlook. This follows from the new government’s move to put all mega projects under review which would inevitably result to project rollout delays or an outright cancellation.

Forecast. Unchanged as YTD construction job win is still within our full year target of RM300m.

Maintain HOLD, TP: RM1.38. Maintain HOLD rating and TP of RM1.38 (10x mid FY19 P/E). Despite its record order book, we remain cautious on the slowing macro job flow outlook.

Source: Hong Leong Investment Bank Research - 15 Aug 2018

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