Advancecon Holdings BhdKenneth Leong

Strengthening recurring income

• Renewable energy diversification equipped Advancecon with a total of 3 major solar projects with combined 3,710.5kWp solar photovoltaic system that will provide long term recurring income to sustain earnings visibility over the years. Outstanding construction orderbook of RM704.5m will provide earnings visibility to the construction segment over the next 18 months.

• Earnings recovery to take place from 3QFY20 as the group’s operations has fully resume works since end-May 2020, backed by more than a dozen of construction projects. Technically, share price has breakout above the RM0.395 resistance, targeting RM0.435-RM0.455 with long term target at RM0.475.

Trading Catalyst

• Advancecon Holdings Bhd (Advancecon) is regarded as one of the leading players, having over 25 years of experience in provision of earthworks and civil engineering services to the local construction industry. The group has and currently undertaking several notable projects such as property related projects such as Setia Ecohill, Setia Eco Garden and Cyberjaya Flagship Zone and infrastructure transportation projects such as West Coast Expressway, Lekas Highway and Pan Borneo Highway.

• As part of the group’s business expansion, the group has engaged Solarvest Energy Sdn Bhd as engineering, procurement, construction and commissioning (EPCC) contractor to jointly co-operate for the purposes of undertaking solar renewable energy projects. At present, Advancecon has a total of 3 major solar projects with combined 3,710.5kWp solar photovoltaic system that will provide long term recurring income to sustain earnings visibility over the years. At the same time, the group’s outstanding orderbook of RM704.5m will provide earnings visibility to the construction segment over the next 18 months.

• We reckon earnings recovery to take place from 3QFY20 as the group’s operations has fully resume works since end-May 2020, backed by more than a dozen of construction projects.

Technical Outlook

• Technically, share price has found some support along the daily EMA120 level following the recent retracement. Price subsequently formed a breakout above RM0.395, rising to close above the its daily moving average lines that may drive share price higher towards the next resistances at RM0.435-RM0.455 with long term target at RM0.475. Support is pegged at RM0.36 and cut loss is located at RM0.355.

Source: Mplus Research - 8 Jul 2020