Eversendai announced that it has secured several new contracts worth RM316m in Qatar, India and Malaysia. The new projects are:

(1) structural steel roof construction for a theme park at the Doha Oasis mixed-use development;

(2) iconic 182 meter tall Statue of Unity in Gujarat, India (completion by July 2017);

(3) fabrication and supply of structural steel for a refinery (completion by September 2016) and two contracts for a Steam Cracker Complex (completion in December 2015 and August 2018) in Petronas RAPID project in Pengerang, Johor;

(4) main contractor for the construction of a glove manufacturing factory in Klang (completion by July 2016) (Bursa Malaysia).

Permodalan Nasional has awarded a RM3.4bn contract to build the KL118 Tower in Kuala Lumpur to a consortium comprising Samsung C&T Corp and UEM Group (The Star).

Comment: The new contracts will lift Eversendai’s total new projects secured to RM1.5bn year to date. This is in line with our expectations that its construction order book will increase to RM3bn by end-2016. We are maintaining our earnings forecasts for now but there is potential upside if it secures new contracts to grow its current order book of about RM2.6bn.

The award of the KL118 Tower contract to Samsung-UEM consortium improves the prospects of Eversendai clinching a subcontract for structural steel works for this project. We understand that Eversendai has a close relationship with Samsung due to its excellent track record as a subcontractor for Samsung for past projects such as Burj Khalifa and Petronas Twin Towers. We reiterate our BUY call with RM1.18 target price, based on FY16E PER of 12x.

Source: Affin Hwang Capital Research - 24 Nov 2015