News

• Secures building contract. Mitrajaya announced that it has been appointed by STF Resources as the building contractor for “A Centre of Excellence” at Jln Dato Onn, KL worth RM273.8m. The job is scheduled for completion by April 2019 (within 2 years).

Comments

• BNM related job. According to its website, STF Resources is wholly owned by the Staff Training Fund, which is a collaboration between Bank Negara Malaysia (BNM) and The Asian Institute of Chartered Bankers. The facility is expected to be occupied by the Asian Institute of Chartered Bankers, Asian Institute of Finance, Securities Industry Development Corp and Malaysian Insurance Institute. This contract is Mitrajaya’s 2 nd job win from BNM. It previously constructed BNM’s Business Operation Complex (RM187m) in Dec 2014.

• 1 st job win for the year. This job is Mitrajaya’s first job win for the year. Mitrajaya’s job wins have shown a healthy signs of picking up in FY16 at RM920m vs RM469m in FY15. With this job in the bag, we estimate its orderbook to currently stand at RM1.8bn, translating to a cover ratio of 2.1x on FY16 construction revenue.

Risks

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

Forecasts

• As YTD job wins of RM273.8m are still within our full year assumption of RM1bn, we leave our earnings forecast unchanged.

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 8.2x and 7.5x on back of 2-year projected earnings CAGR of 10%.

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 - 17 Apr 2017