- Maintain BUY on Sarawak Cable Bhd with a SOP-derived fair value of RM2.33/share.
- Last Friday, Sarawak Cable (S Cable) announced on Bursa Malaysia that its wholly-owned subsidiary Trenergy Infrastructure with JV partner Sinohydro Corp have received a letter of intent (LOI) from Sarawak Energy (SEB) its intention to award the two packages of the 500kV transmission line for a total of RM620mil.
- The packages consist of the Mapai-Lachau and LachauTondong lines worth RM353mil and RM266mil respectively.
- S Cable said formal contract agreements for the two packages are expected to be entered in due course. Commencement of works is slated for next month with completion periods of 23 months and 25 months for the Mapai-Lachau and LachauTondong lines respectively.
- The award confirms our previous reports that the 500kV line (packages now worth a total of RM1.2bil) was expected to be awarded in Aug/Sept. We expect contributions from the project to begin in the 4QFY13.
- The two packages won by S Cable is part of six that were awarded last Friday. According to The Edge Malaysia, the other successful bidders were:- (i) Toshiba Transmission & Distribution System Asia Sdn Bhd-Xian Electric Engineering (Similajau-Mapai and Mapai-Oya lines); (ii) KEC International Ltd (Mambong-Entiggan substation extension); and (iii) Pestech Sdn Bhd (Mapai substation project).
- Together with the 132kV Tudan-Miri airport job it secured in June, S Cable has won a total of RM650mil new transmission jobs this year. We have an order book assumption of RM1bil for FY13F.
- Looking forward, two more projects that might be awarded in the near term include the Tanjung Manis-Bintulu and Manbong-Kalimantan lines worth ~RM400mil.
- Meanwhile, it was also reported last week that the Indonesia government and Asian Development Bank (ADB) are moving forward with plans to build a cross-border transmission line linking Sarawak and West Kalimantan.
- ADB said the project would built a 145km distribution line within West Kalimantan, and another 83km cross-border line connecting Sarawak and West Kalimatan. ADB has secured a US$100mil loan for the Kalimantan side and is preparing a second loan to finance the project for the Malaysian side.
- Note that the ex-date for the 1-for-5 bonus issue has been set for Sept 10 and the entitlement date is Sept 12. S Cable is trading at an alluring core FD PEs of 6x-11x for FY14F-15F.
Source: AmeSecurities
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