Scores Maiden Job For2012
THE BUZZ
TRC Synergy announced that its wholly-owned subsidiary,Trans Resources Corporation SB, has received the Letter of Award from KompleksDayabumi SB for the construction and completion of the proposed alteration andaddition works to the existing Kompleks Dayabumi for a contract sum of RM36m.
OUR TAKE
Within expectations. This marks TRC's maiden contract for the year, and which we deem in line withour expectations, with our FY12 and FY13 orderbook replenishment targetremaining unchanged at RM500m per year. The deadline for this project was not disclosedbut we expect works to be completed within 18 months, judging from the quantum involved.
More from KV MRT.With the burgeoning news flow on the Klang Valley My Rapid Transit(KV MRT), we continue to see trading sentiment improve as we head into 2QCY12 onthe potential award of more packages on the elevated portion of the Sungai Buloh-Kajang(SBK) line. We understand from sources that at least 3 more MRT contracts arelikely to be dished out by April, which we understand will be for the stretchescovering Semantan-Seksyen 17, Sg Buloh-Kota Damansara as well as Bandar TunHussein Onn-Saujana Impian. We continue to believe that TRC is a strong contenderfor the elevated works as it is the only contractor that has been prequalified forall categories in both the open and bumiputra portions. Also, its ongoinginvolvement in the Kelana LRT-A extension means that it hasalready procured the required equipmentto carry out the job.
Revival of SCOREseems likely. On top of these, we expect to see a potential revival in theSarawak Corridor of Renewable Energy (SCORE). Although the flow of contracts inEast Malaysia has been sluggish, we believe it could finally gain traction,with SCORE in particular. Note that in late-Feb this year, the FederalGovernment allocated RM500m for the construction of a second port in Bintulu topropel Samalaju Industrial Park into a highly-developed and competitiveeconomic hub. Coincidentally, early this month, 2 South Korean companies havecommitted to invest a combined USD650m in the said industrial park. We understand that the approved investments inSCORE have now increased to RM32bn. All these developments jive in with ourview that there may be a turn in fortunes in the run-up to the widely expected general election as we see the current rulingBarisan Nasional coalition likely to win over Sabah and Sarawak voters via thecontracts, as the 2 states gave it a combined 54 parliamentary seats out of the140 the coalition secured nationwide.
TRADING BUY. Wemaintain our TRADING BUY call. Although we make no changes to our estimates atthis juncture, we are pegging a higher FY12 PER of 14x (from 12x previously) toour valuation in anticipation of a slew of contract flows for TRC over the next2-3 months in relation to the MRT packages as well as potential works in SCORE.Our new FV is RM0.84.