- We maintain
BUY on Hock Seng Lee Bhd (HSL), with a sum-ofparts fair value of RM2.59/share,
which includes a PE of 9x against its
3-year average forward earnings for its construction division. The valuation is
supported by net cash of 40 sen/share and RNAV for its 890acre-landbank at 65
sen/share.
- HSL today
announced the securing of a RM291mil contract for the construction of a UiTM
new campus in Mukah, Sarawak. It signed the agreement with concessionaire KP
Mukah Development Sdn Bhd yesterday for the design, construction, and
commissioning of the campus facilities.
- Following
this, its year-to-date new orders have been bumped up to about RM472mil, well
surpassing that of RM313 million for the whole of last year. Of the more than
RM2.0bil worth of jobs (including the new UiTM job) currently in hand, over
RM1.3bil remains outstanding.
- We maintain
our annual new order book assumption at RM600mil for FY12F-FY14F. For FY12F,
that would very likely be achieved, if not exceeded. We also maintain our
overall group EBITDA margin assumption at 18%.
- The scope of
works includes sand filling, piling, civil infrastructure, buildings, and
mechanical and electrical works. The construction will take 36 months, for
completion by 3Q2015. HSL said with the low-lying terrain and inclusion of a
substantial lake as a scenic feature of the campus, it would will draw on its marine
engineering expertise.
- HSL’s winning
the UiTM contract is not a surprise, as we had expected the company to secure
the job, which is part of our new job assumption for the year. HSL said the
UiTM Mukah project will be only the second of its kind in Sarawak to be implemented
under the Private Financing Initiative concept; the first having been located
in Samarahan, Sarawak.
- The setting
up of the UiTM branch campus is for the development of human capital to
complement the fast-paced development of the Sarawak Corridor of Renewable
Energy (SCORE). The campus will covers about 64 acres, with walkways and five
blocks of five-storey apartments for live-in accommodation.
- Potential
jobs in the pipeline are:- 1) The remaining RM1.7bil packages of the Kuching
central sewerage system; 2) the construction of the new permanent Samalaju
port; 3) participation in the construction of power-related plants and ancillary jobs; and various roads,
water, flood mitigation and other infrastructure projects.
Source: AmeSecurities
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