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Saturday, January 15, 2011

HSL confident of another RM500 million worth of jobs this year

KUCHING: Homegrown construction player, Hock Seng Lee Bhd (HSL) is convinced of winning another RM500 million in jobs this year, with an upside of RM600 million.

MUKAH AIRPORT EXTENSION: Photo shows a view of Mukah Airport. HSL is eyeing the Mukah Airport extension works worth RM300 million.

In its research report, OSK Research Sdn Bhd (OSK Research) said this came on the back of HSL managing to secure RM532 million worth of jobs last year, which marginally surpassed its RM500 million target.

However, this year, the research house had a more conservative assumption of RM400 million. In the near term, it said HSL might bag another two road packages collectively worth RM150 million.
For that matter, HSL also had an eye on the Tanjung Manis port extension worth RM300 million, Mukah Airport extension also worth RM300 million, an education facility worth RM260 million and a flyover job worth RM100 million.

In other developments, the research house said that it understood the government intended to implement a mass affordable housing project across Sarawak worth RM1 billion with another RM1 billion allocated for rural infrastructure and utilities. While these jobs were sizeable, they would be broken up into packages worth RM20 million to RM30 million each and OSK Research expected HSL to win some.

HSL’s management also indicated that Phase 2 of the Kuching Wastewater project was now 30 per cent complete and on track for the second quarter of 2014 (2Q2014) deadline. The company had submitted its proposal for Phase 2 worth RM500 million, with the results possibly made known after the state elections.

The entire job over four phases was worth RM2.2 billion and given HSL’s experience with Phase 1 and possession of the necessary equipment, the research firm opined it stood a good chance with the subsequent phases.

It also said HSL was in discussions on a concession to maintain the wastewater system once it was completed.

On the issue of Sarawak state elections, HSL’s management was still unsure of the actual date. While there were concerns that contract flows might diminish post-election, it believed otherwise and expected to know the outcome of most of its tenders after the polls, according to the research house.

The company’s fourth quarter results would be announced sometime in February and management was confident of achieving approximately RM70 million in earnings for the full financial year 2010 (FY10); only a slight deviation from the research house’s forecast of RM72.2 million.

Thus, OSK Research pegged HSL’s target price at RM2.32 per share based on 14.5 times FY11 earnings.


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