Mitrajaya has secured a RM89.9m contract for refurbishment works of a hotel in Putrajaya. With the latest job win, orderbook is now estimated at RM914m, implying a cover ratio of 1.3x. We reckon that Mitra is not a key beneficiary of revived infrastructure jobs due to its focus on private sector building jobs. Maintain earnings forecast as YTD construction job wins still within our full year target of RM500m. Maintain SELL with unchanged TP of RM0.23 which is pegged to 7x P/E multiple to FY19 earnings.

NEWSBREAK

Hotel refurbishment contract. Mitra announced that it has been awarded RM89.9m contract from Idaman Putrajaya Sdn Bhd for refurbishment works of a hotel at Lot 5P2, Precinct 5, Putrajaya. The work is expected to commence on 25 June 2019 and completed within a period of 38 weeks.

HLIB’s VIEW

First job win. This is the first job win for the company YTD. This brings Mitra’s orderbook to c.RM914m which translates to 1.31x cover on FY18 construction revenue.

Not strongly benefiting from revived infrastructure jobs. Mitra is less involved with public infrastructure jobs relative to private sector jobs in the past and is expected to continue to focus on private sector building jobs going forward. As a result, we reckon that Mitra may not be a key beneficiary of revived infrastructure jobs. Moreover, persistent weakness of property market caused by oversupply issue further dampens the prospect in private sector building jobs in which Mitra is focusing on.

Forecast. Maintained as YTD job win is still within our orderbook replenishment assumption of RM500m.

Maintain SELL, TP: RM0.23. We maintain our SELL rating with unchanged TP of RM0.23. TP is pegged to 7x P/E multiple to FY19 earnings.

Source: Hong Leong Investment Bank Research - 24 Jun 2019