Scores Maiden Job For
2012
THE BUZZ
TRC Synergy announced that its wholly-owned subsidiary,
Trans Resources Corporation SB, has received the Letter of Award from Kompleks
Dayabumi SB for the construction and completion of the proposed alteration and
addition works to the existing Kompleks Dayabumi for a contract sum of RM36m.
OUR TAKE
Within expectations. This
marks TRC’s maiden contract for the year, and which we deem in line with
our expectations, with our FY12 and FY13 orderbook replenishment target
remaining unchanged at RM500m per year. The deadline for this project was not disclosed
but we expect works to be completed within 18 months, judging from the quantum involved.
More from KV MRT.
With the burgeoning news flow on
the Klang Valley My Rapid Transit
(KV MRT), we continue to see trading sentiment
improve as we head into 2QCY12 on
the potential award of more packages on the elevated portion of the Sungai Buloh-Kajang
(SBK) line. We understand from sources that at least 3 more MRT contracts are
likely to be dished out by April, which we understand will be for the stretches
covering Semantan-Seksyen 17, Sg Buloh-Kota Damansara as well as Bandar Tun
Hussein Onn-Saujana Impian. We continue to believe that TRC is a strong contender
for the elevated works as it is the only contractor that has been prequalified for
all categories in both the open and bumiputra portions. Also, its ongoing
involvement in the Kelana LRT-A extension means that it has
already procured the required equipment
to carry out the job.
Revival of SCORE
seems likely. On top of these, we expect to see a potential revival in the
Sarawak Corridor of Renewable Energy (SCORE). Although the flow of contracts in
East Malaysia has been sluggish, we believe it could finally gain traction,
with SCORE in particular. Note that in late-Feb this year, the Federal
Government allocated RM500m for the construction of a second port in Bintulu to
propel Samalaju Industrial Park into a highly-developed and competitive
economic hub. Coincidentally, early this month, 2 South Korean companies have
committed to invest a combined USD650m in
the said industrial park. We understand that the approved investments in
SCORE have now increased to RM32bn. All these developments jive in with our
view that there may be a turn in fortunes in the run-up to the widely expected general election as we see the current ruling
Barisan Nasional coalition likely to win over Sabah and Sarawak voters via the
contracts, as the 2 states gave it a combined 54 parliamentary seats out of the
140 the coalition secured nationwide.
TRADING BUY. We
maintain our TRADING BUY call. Although we make no changes to our estimates at
this juncture, we are pegging a higher FY12 PER of 14x (from 12x previously) to
our valuation in anticipation of a slew of contract flows for TRC over the next
2-3 months in relation to the MRT packages as well as potential works in SCORE.
Our new FV is RM0.84.
Source: OSK188
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