AZRB: Favourite to bag RM310m Works Ministry job

by Guest Tue 17 Nov 2009, 17:15

Industry sources say that AZRB is close to securing a RM310m job for from Works Ministry to build Kompleks Kerja Raya 2 in KL and a RM50m contract for initial works for Hulu Terengganu Hydroelectric project. The jobs will raise its outstanding order book by +33% to RM1.4bn, 2.2x FY08A revenue (FY08: RM648m). Margins for the Kompleks Kerja Raya job is likely to be thin as competiton for the job is high and the project value has been revised downwards from RM350m in Jul08. According to news reports, other players that bidded for the job are IJM, MRCB, UEM and Sunway Construction.

AZRB’s share price (+103% YTD) is valued at FY09 and FY10 PE of 12x and 10x respectively. Assuming that the projects carries a 5% net margin and build over a period of 3 years, we estimate AZRB’s FY10 earnings to be revised upwards by +20%.

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