Investment Highlights

• We maintain our BUY call, forecasts and FV of RM1.35, which is at a 25% discount to our SOP valuation of RM1.80 (Exhibit 1).

• The recent award to Ekovest of a RM100mil River of Life (RoL) work package solidifies our view that Ekovest is the key beneficiary of this Pemandu-driven initiative. All-in, Ekovest has now secured four out of total five work packages rolled out from this project.

• To recap, this RoL project has been identified as entry point project (EPP) under the National Key Economic Area (NKEA), which aims to revitalize the Klang & Gombak rivers into vibrant and livable waterfronts. The project is divided into three parts which are: 1) river cleaning – to clean the 110km Klang river stretch (Exhibit 2) and to improve the water standard to recreational standard; 2) river beautification – beautification works at the 10.7km tract along the Klang and Gombak river corridors (grouped into 11 precincts from Titiwangsa to Seputeh), revolving along major landmarks in the city centre; and 3) land development – areas adjoining the river corridors to be developed to spur economic investment.

• The projects that have been secured by Ekovest were mostly along the 10.7km tract, amounting ~RM670mil. Ekovest’s primary job scope includes river cleaning and beautification. The recent RoL job won by Ekovest worth RM100mil is to undertake river cleaning and beautification exercise in Taman Titiwangsa, which is expected to be completed within 78 weeks. This is the first construction job Ekovest has secured in FY18, boosting its outstanding order to RM13bil.

• Meanwhile, for land development under the RoL project, the company has also launched its maiden waterfront project called KL Waterfront in 2017 (formerly known as KL River City project) which is located along the 10.7km tract river corridor (northern zone). The development, which sits on the Titiwangsa district and spans across 2.2km Gombak river stretch, is to provide a riverfront lifestyle and serene landscape for the public. The surrounding area of KL Waterfront project, which covers approximately 320 acres, has huge potential for future developments for other developers including Ekovest. Ekovest, whch owns several land parcels along the vicinity, plans to launch several property and mixed development projects with an estimated GDV of RM6bil.

Source: AmInvest Research - 14 Mar 2018