• Ikhmas secured a contract worth RM101.8m from the Department of Irrigation and Drainage for a flood mitigation project in Kedah.
• We estimate the annual contribution to its bottom line is RM1.7m or 5% up to 2021 based on a 7% net margin assumption.
• YTD, the total job secured amounts to RM398m or already close to 80% of our RM500m orderbook replenishment assumption.
• Maintain BUY with an unchanged TP of RM0.51. Its outstanding orderbook of RM900m provides earning visibility of up to 2021.

Secured RM101.8m for flood mitigation project

Ikhmas secured a contract of RM101.8m for flood mitigation project from Department of Irrigation and Drainage. The project includes demolition and site clearance, piling works, upgrading of bridges, upstream and improvement works for Sungai Choras/Sungai Sala in Pendang, Kedah. We estimate this 36-month project would add 5% annually to its bottomline (up to 2021).

Keeping its momentum towards RM500m job secured

With this contract, the total YTD job secured amounts to RM398.1m. This is already 79.6% of our total orderbook replenishment assumption of RM500m. This project also boosts Ikhmas orderbook to RM900m, providing earnings visibility of up to 2021.

Positive upbeat from key infrastructure projects

Management noted that all of the ongoing projects are moving into acceleration phase of “S-curve” with 6 amount of projects ending by 2Q18. This would provide some relief in capacity to accommodate more contracts especially with the rollout of key infrastructure projects such as LRT3, ECRL and Electrified Double Tracking Gemas-JB.

Maintain BUY with unchanged TP of RM0.51

We maintain our BUY call with an unchanged TP of RM0.51 which is based on 11.1x PE multiple applied to its 2018E EPS. At current level, the stock is valued at an undemanding 8.5x 2018E P/E.

Source: BIMB Securities Research - 20 Apr 2018