- Sarawak Cable Bhd yesterday announced that its wholly-owned subsidiary, Trenergy Infrastructure Bhd and a JV partner have won the tender for a TNB job worth RM26.8mil.

- Trenergy and PTIS Engineering Sdn Bhd JV had won the tender for the establishment of a 275kV AIS Tanjung Langsat Industrial Estate Station in Johor.

- The job has commenced yesterday and will take 483 days (~16 months) to be completed.

- Assuming a net margin of 5%, we expect the job to contribute marginally to the group’s bottomline over FY15F-FY16F.

- More importantly, we think the award is a precursor to bigger jobs in Peninsular Malaysia.

- Following its acquisitions of Leader Cable and Universal Cable that were completed late last year, the consolidated group is well positioned to bid for upcoming TNB jobs (with a reported capex of ~RM1bil p.a. to upgrade the transmission and distribution network).

- Potential jobs include the 500kV transmission line in Semenanjung as well as the Selangau-Mapai transmission line and the 275kV Tondong substation project.

- The group has a strong tender book of ~RM1bil, and an outstanding order book of ~RM2bil.

- Following major provisions for FY14, we believe that SCable’s earnings will rebound this year due to stronger progress billings from its 500kV backbone job in Sarawak as well as contributions from the RM493mil Balingian and RM257mil Pengerang jobs.

- We maintain our forecasts as the new win is within our new order book assumption of RM260mil for FY15F.

- We maintain BUY with our unchanged fair value of RM1.70/share, pegged to 9x FY15F PE.

Source: AmeSecurities Research - 9 Apr 2015