News Eversendai has been appointed as a supplier for the Iron Ore Distribution (Package P-302-Pipe and Cable Rack Structure and Miscellaneous) project at Teluk Rubiah, Manjung, Perak.
The value of the contract is worth RM45.9m for a period of 12 months.
Comments This new contract is within our expectation as it is part of the company's c.RM1.4b order book replenishment forecast by us.
As at YTD, ECB's current order book secured has reached RM928m and the newly secured contract of RM45.9m is within our order book replenishment assumption.
Outlook In line with our in-house construction sector Overweight view, we see the potential of ECB to further secure steel structural projects from ETP (Economic Transformation Programme) and the 10th Malaysia Plan projects such as the much-awaited 100-storey Warisan Tower, International Financial District and MRT.
In addition, ECB's consortium with its partners, Mudajaya and Alstrom, has managed to secure several power plant jobs like the Tanjung Bin power plant and the Janamanjung plant, which may also help ECB to secure more steel structural projects going forward like the Prai power plant this year.
We also expect a stronger order book replenishment growth from India as well as the Middle East as ECB has also bid for other jobs here such as the Abu Dhabi airport expansion and Capital Gate, which is part of the Abu Dhabi National Exhibition Centre.
Forecast We are keeping our FY12-13E earnings forecasts of RM125-RM147m unchanged as we have factored in c.RM1.4b order book replenishment and this contract is within our forecast.
Rating Maintain OUTPERFORM
Valuation Our fair value for the company remains unchanged at RM2.33 based on 12x PER on its FY13E EPS.
Risks Fluctuation in steel prices.
Adverse movement in foreign exchange rates.