AmResearch maintains Buy on Hock Seng Lee, Fair value RM2.48

AmResearch maintains Buy on Hock Seng Lee, Fair value RM2.48
Business & Markets 2013
Written by theedgemalaysia.com
Friday, 28 June 2013 14:52

KUALA LUMPUR (June 28): AmResearch has maintained its Buy rating on HOCK SENG LEE BHD [] at RM1.98 with a fair value RM2.48 after the company at midday announced the securing of a RM228mil contract with Eastbourne Corporation Bhd for the CONSTRUCTION [] of a building in Petra Jaya, Kuching.

In a note Friday, the research house said it understood that this latest sub-contract was for a new Islamic centre in Kuching.

It said the scope includes the construction of an 18-storey commercial and office building with a two-level basement and related infrastructure works.

HSL had said the duration of the contract works was 30 months and will be due to be completed by the 1Q16.

This brings the total new order for the year to RM381 million, with about RM1 billion out of a total of RM1.8 billion worth of jobs in hand currently still outstanding.

“We maintain our new order assumption of RM600mil, which we deem to be easily achievable (versus RM525 million in FY12). We maintain our forecasts numbers for now. We remain optimistic about HSL’s prospects over the next 2-3 years, given plenty of job opportunities within and without Sarawak’s SCORE.

“As had been noted earlier, the state administration, following GE13, has started to refocus on the much-needed infrastructure development in the state. We continue to like HSL for its:- 1) strong earnings visibility, 2) strong balance sheet, including RM200 million cash and cash equivalents, and 3) as a proxy to the strong growth in the state’s construction sector,” it said.