Posted by dknycom > 2012-07-06 14:52 | Report Abuse

Hock Seng Lee (BUY)

Major boost from RM219m UiTM project

HSL has secured a RM291m turnkey contract for the construction of Universiti Teknologi Mara (UiTM), Mukah, from Concessionaire KP Mukah Development S/B. The project is expected to take 36 months and scheduled for completion by 3QCY15.
The latest project is a sizable win for HSL, representing ~50% of FY11’s construction revenue. Thus, bringing YTD jobs won to RM472m, exceeding our order book replenishment assumption of RM400m for FY12. HSL is targeting ~RM600m worth of new jobs win this year and given the prospects for power, dredging and sewerage-related jobs, we believe that the company is able to achieve it.
The latest award will boost HSL’s outstanding order book to ~RM1.3bn, translating to ~2.3x FY11’s construction revenue and ~1.3x order book-to-market cap ratio.
We prefer to remain conservative in our earnings forecasts and keeping it unchanged. That said, we may revise earnings upwards if the company secures another substantial contract.
Maintain TP of RM2.21 based on 12x average FY12 and FY13 earnings.