PETALING JAYA: The clinching of the third highway concession, DUKE2A, by Ekovest Bhd is set to inflate its construction orderbook to over RM10bil in the next 18 to 24 months.

UOB Kay Hian research, which is maintaining a buy call on the stock with a target price of RM3.13, on Wednesday said with this project on board the company’s near- to medium-term construction earnings outlook is further enhanced, with construction orderbook set to easily surpass RM10bil  in the next 18-24 months.   

In an announcement to the stock exchange, Ekovest yesterday said its subsidiary, Lebuhraya DUKE Fasa 2A Sdn Bhd, had received a letter from the government on the principal approval of the proposed privatisation of the 75.2-km Kampung Baru Link, Istana Link and Kapar Link Expressway (DUKE2A). The estimated project cost for the highway concession is RM6.32bil.

Taking the project commencement of the SPE as a benchmark, construction works for DUKE2A could begin as early as in the third quarter of 2018, the research house said.

The DUKE2A would complement the existing Duta-Ulu Kelang Expressway (DUKE) 1 & 2, as well as the Setiawangsa-Pantai Expressway (SPE). The DUKE2A (via the Istana Link) would provide a missing link between DUKE 1 and SPE, while the Kampung Baru link of DUKE2A would allow for seamless connection from Kampung Baru to DUKE 2 and thereafter to DUKE 1.

The funding of the project, according to the brokerage, would most likely be a combination of bonds and equity. The group would also discuss with the government the terms of the
concession agreement, which would include the tenure of the concession as well as the toll rates for the new highway.

Presently, Ekovest’s outstanding construction orderbook stands at about RM5.4bil, which would ensure smooth earnings delivery for the construction division for the next four years. The
bulk of the orderbook relates to the construction of the SPE as well as the recently secured Pan Borneo Highway in Sarawak. 

“Assuming the group manages to clinch the bulk of the RM6.32bil worth of construction jobs for DUKE2A (like it did for SPE), its outstanding construction orderbook could easily exceed RM11bil (implying a whopping 13.1 times orderbook cover), which would be progressively recognised until 2023,’’ UOB Kay Hian noted.

Source: http://www.thestar.com.my/business/business-news/2017/01/18/ekovest-orderbook-to-exceed-10bil-in-18-to-24-months-time/