Secures Flood Mitigation Job Worth RM23.8mn

TRC has accepted a letter of award for a contract worth RM23.8mn from the Department of Irrigation and Drainage.

The award is for the design and build a a flood mitigation dam in Gombak, Selangor.

The project is expected to commence on 2 January 2024 and will take about 3 years to complete from the commencement date.

Our View

This is the second construction job secured by TRC in 2023, bringing the total year-to-date contract win to about RM33.6mn. Assuming a PBT margin of 8%, the project is estimated to generate RM1.5mn of net earnings throughout the construction period.

Meanwhile, this is the first time TRC secures a flood mitigation job from government. We believe this will open up further opportunities for the group to secure more similar jobs if this project is executed successfully. Under Budget 2024, a total of 33 high-priority flood mitigation projects are expected to be implemented next year with a cost of RM11.8bn.

Following the job win, TRC’s total outstanding order book now stands at about RM0.5bn, equivalent to 0.8xFY22 revenue.

Forecast

Maintain our FY23 to FY25 earnings forecasts as the job win is within our FY23 order book replenishment assumption of RM500.0mn.

Valuation

The target price is maintained at RM0.42, based on unchanged 9xCY24 earnings. Maintain Buy on TRC.

Source: TA Research - 26 Dec 2023