Eversendai Corporation - NOT RATED - New job from Middle East

Eversendai Corporation (ECB) announced that it had been appointed as a subcontractor to erect structural steel works worth SAR193m (c. RM158m) for the railway station in the King Abdul Aziz International Airport Development Project - Phase 1 in Jeddah, Kingdom of Saudi Arabia. The project was awarded by the Saudi Binladin Group Architecture & Building Construction Division. It is expected to be completed by 2013. We are keeping our FY11-FY12E earnings forecasts of RM110mRM121m unchanged as we have factored in c.RM1.0b order book replenishment and this contract is within that expectation. We have a NOT RATED rating on Eversendai for now as we have yet to formally cover the stock. Our fair value for the company however remain unchanged at RM2.19 based on 14x PER on its FY12E EPS.

More new awards from the Middle East.  Eversendai Corporation Berhad (ECB) announced that Eversendai Engineering LLC in Dubai, a wholly owned subsidiary of ECB, had been appointed as a subcontractor to erect structural steel works worth SAR193m (c. RM158m) for the railway station in the King Abdul Aziz International Airport Development Project - Phase 1 in Jeddah, Kingdom of Saudi Arabia. The project was awarded by the Saudi Binladin Group Architecture & Building Construction Division. This project is expected to be completed by 2013 and it will use c.12,000 tonnes of steel. 

Strong order book of RM2.3b. As at YTD, ECB’s current order book has increased by the RM158m above to RM2.3b (+7%). This new contract is within our expectation as it is part of the company’s c.RM1.0b order book replenishment, which is based on a 20% success rate of its total tender book value of c.RM12.0b. Main income from Middle East. We understand that ECB has also bid for other jobs such as the Abu Dhabi airport expansion and Capital Gate, which is part of the Abu Dhabi National Exhibition Center. With about 60% of ECB’s income coming from the Middle East now, the company  is moving its focus to India given the potential market in that country. To date, the company is doing c.RM350m worth of works in India. 

Valuation.  We are keeping our  fair value on Eversendai unchanged at RM2.19  based on 14.0x PER of its FY12 earnings.  However, we have a  NOT RATED rating on the company  for  now  as  we  have  yet  to  initiate  formal  coverage  on the stock.  

Source: Kenanga