News

• Bags WCE contract. Mitrajaya announced that it has been awarded a RM183.4m contract for the West Coast Expressway (WCE) from the SKVE interchange to the KESAS interchange. The job was awarded by the highway’s concessionaire, West Coast Expressway SB and is scheduled for completion within 30 months.

Comments

• Ending the year strong. With this job in the bag, Mitrajaya’s YTD job wins currently stands at RM920m, which has almost doubled from year’s sum of RM469m. This is also close to management’s full year guidance of RM1bn. We estimate its orderbook balance to now stand at RM1.7bn, translating to a cover ratio of 2.2x on FY15 construction revenue.
• Ara D’sara job next? It was recently reported in The Edge that Mitrajaya is in the running for a RM400m condo job in Ara Damansara. Mitrajaya is said to have submitted the most competitive bid for the job. Should this materialise, the contract would boost Mitrajaya’s orderbook by +24% to RM2bn.

Risks

• Lower than expected orderbook replenishment could slow down its earnings growth potential that has been robust over the last 3 years.

Forecasts

• Mitrajaya’s YTD job wins of RM920m has surpassed our full year assumption of RM800m. Nonetheless, we are taking a conservative stance and keep our forecast unchanged for now. We have assumed new job wins of RM1bn p.a. for FY17-18.

Rating

Maintain BUY, TP: RM1.95

• Despite its earnings growing at a CAGR of 69% over the last 3 years, Mitrajaya continues to deliver commendable results. Valuations are undemanding with FY16-17 P/E of 8.4x and 7.7x on back of 3-year projected earnings CAGR of 11%.

Valuation

• Our SOP based TP of RM1.95 implies FY16-17 P/E of 13.2x and 12x respectively

Source: Hong Leong Investment Bank Research - 28 Dec 2016