Period  1Q14

Actual vs. Expectations At 15% full-year FY14 estimates of both ours as well as consensus, we deem the 1Q14 net profit of RM4.4m as within expectations given that 1Q is seasonally a weak quarter.

Dividends  No dividend was declared for the quarter, as expected.

Key Results Highlights The 1Q14 net profit surged 82% YoY to RM4.4m from RM2.5m the previous corresponding quarter as topline jumped 86% over the year to RM45.1m from RM24.3m previously. This was mainly attributed to a total of RM262.5m new projects secured in 2013. This includes the RM16.0m TENAGA’s project in Jerantut, USD3.0m substation project in Mali, RM95.6m Mapai Substation for Sarawak Energy, USD29.3m Laos project and USD16.6m Sakura project in Sarawak.

 Sequentially, the 1Q14 net income contracted 34% QoQ from RM6.6m as revenue declined 28% from RM62.3m in 4Q13. The contraction was not alarming given the timing difference in project execution. The two new projects secured in 1Q14, namely the RM85.0m Mambong-Entingan project for Sarawak Energy and

USD86.01m 2nd Cambodian project should augur well for 2Q14 and beyond.

Outlook  The RM700m order book should provide at least two years of firm earnings visibility. With its current tender book of RM1.33b, we believe our new order assumption of RM350m-RM400m in FY14-FY15 is not overly optimistic.

Change to Forecasts No changes to our FY14-FY15 estimates.

Rating Maintain OUTPERFORM

Valuation  We decided to upgrade the targeted CY15 PER to 13x from 12x, to derive a new price target of RM5.34/share from RM4.93/share previously.

 We believe the premium valuation to the small cap valuation of 11x-12x is justifiable given its explosive 40% annual earnings growth for FY14E and FY15E coupled with potentially strongerthan-expected order book replenishment in the coming months.

 Ex-bonus issue (2-for-3), target price would be adjusted to RM3.20/share.

Risks to Our Call    Failure to replenish orderbook.

 Cost over-runs.

Source: Kenanga