News

• Secures building contract. Mitrajaya announced that it has won a contract to build a higher learning institution in KL for RM160m. The job is scheduled to be completed within 2 years (i.e. May 2019).

Comments

• Job wins adding on nicely. This contract is Mitrajaya?s 2nd job win for the year. Recall that last month, Mitrajaya secured a RM274m BNM related job for ?A Centre of Excellence? building in KL. Overall, this brings YTD job wins to RM434m (FY16: RM920m).
• Orderbook level remains healthy. Mitrajaya?s orderbook stood at RM1.5bn as of end FY16. Assuming a burn rate of RM220m in 1Q17, coupled with YTD job wins of RM434m, this would place its current orderbook level at RM1.7bn. This translates to a healthy cover ratio of 2x on FY16 construction revenue.
• Gunning for more. Management is gunning for RM1bn in new job wins for FY17 (43% achieved), inline with our target. This will largely comprise of building related jobs and some infra works as well.

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 RM434m 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 8.4x and 7.7x 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 - 12 May 2017