Journey to Wealth
Hock Seng Lee - Riding on Sarawak's Growth
THE BUZZ
Hock Seng Lee (HSL) announced on Bursa that it has received the Ministry of Industrial Development Sarawak's letter of acceptance for infrastructure works at Demak Laut Industrial Park, Kuching. The contract worth RM26m, covers earthworks, sandfilling, water reticulation, drainage, road and associated works scheduled to be completed by Jan 2014.
OUR TAKE
Slowly and steadily. Including this contract, HSL would have secured RM182m worth of new projects YTD against full-year FY11's RM313m and our FY12 orderbook replenishment target of RM400m. As we deem these contracts within expectations, we make no changes to our forecasts at this juncture. HSL's current outstanding orderbook stands at approximately RM1.1bn.
More jobs from SCORE. Going forward, we continue to expect more jobs to flow from the Sarawak Corridor of Renewable Energy (SCORE). This could benefit contractors like HSL, which has a strong presence in Sarawak state. With the 13th General Election widely rumoured to be held only in September 2012, we expect a slew of contracts to be dished out prior to that. SCORE has so far attracted 17 projects worth a total of RM24.6bn.
BUY. We are maintaining our BUY call on HSL, with our FV unchanged at RM1.99, based on a FY12 PER of 12x. We featured the stock as one of our Small Cap Jewels this year, and continue to like HSL for its niche in marine engineering, established execution track record as well as sturdy books, and net cash per share of RM0.33 as of 1QFY12.
Source: OSK
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