• Company profile. HSS Engineers Berhad (HSSEB) is involved in provision of engineering and project management services namely, 1) engineering design, 2) construction supervision and project management and 3) building information modelling services (BIM). HSSEB has experiences in various sectors, which covers urban infrastructure, road and highways, railways and metro systems and etc. Some significant projects that HSSEB has involved include LRT Ampang Line extension, MRT Line 1 and MRT Line 2.

• Outstanding orderbook of more than RM400m. Currently, HSSEB is holding more than RM400m worth of outstanding orderbook, which may last them for another 2-3 years of earnings. Also, with the potential recovery of construction outlook in 2H17, we believe HSSEB will benefit from the award of potential project such as HSR (RM60bn), ECRL (RM55bn), Pan Borneo Highway (RM13bn) and etc.

• Mainboard listing transfer, coupled with Syariah compliant. HSSEB is qualified for the mainboard transfer listing as it has 3 years of cumulative profits of more than RM20m. Hence, we believe the listing transfer may spur further trading interest on the counter.

• Technical outlook. Share price has pullback from the recent resistance of RM0.93 and formed a mild flag breakout yesterday above RM0.91. Coupled with the MACD Histogram turning green yesterday, we expect the price to sustain towards RM1.00-RM1.04, with a LT target of RM1.15. Support will be set around RM0.88-0.90. Cut loss will be anchored around RM0.87.

Source: Hong Leong Investment Bank Research - 27 Jul 2017