Hot Stock Ahmad Zaki jumps 5% to 16-month high on RM172m contract

by **Cals** Fri 12 Jul 2013, 12:25

Hot Stock Ahmad Zaki jumps 5% to 16-month high on RM172m contract
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Friday, 12 July 2013 11:28

KUALA LUMPUR (July 12): Shares in AHMAD ZAKI RESOURCES BHD [] (AZRB) were traded at more than a year high at RM1.03 in mid-morning trades, following news it has bagged a major contract.

Yesterday, the engineering and CONSTRUCTION [] group announced it has won a RM171.5 million contract from Universiti Teknologi Mara (UTM) to design and build an accommodation complex for its Kuala Lumpur campus.

At 10:59 am today, AZRB shares rose five sen or 5.21% to RM1.01. The counter had a trading volume of 4.43 million shares.

Its earlier high of RM1.03 was also the highest since March 12 of last year.

Yesterday, AZRB said its wholly owned subsidiary Ahmad Zaki Resources Sdn Bhd will undertake a three-year contract to develop the UTM campus. The construction of the complex should begin on July 22.

Analysts are positive with this development. Both Alliance Research and RHB Research maintained their “buy” calls on AZRB in their research notes today.

Alliance’s analyst Jeremy Goh said the company remains his top small-cap construction pick.

“We continue to like AZRB for its sizable order book balance which should serve to propel earnings growth from FY14 onwards,” he said.

However, Goh is keeping AZRB’s target price at RM1.22 because the company’s year-to-date job wins of RM1.72 billion are within Alliance’s target of RM1.8 billion.

RHB also maintained its fair value of RM1.47.

The research house’s analyst Joshua Ng said: “The company is beginning to see the fruit of its labour, having grown some defensive non-construction businesses.”

These non-construction businesses include bunkering operation at Kemaman Supply Base, oil palm PLANTATION [] in West Kalimantan, and the design, build, lease, maintain & transfer of a teaching hospital for the International Islamic University Malaysia in Kuantan.

“With their defensive, recurring and less cyclical incomes, these three businesses will materially boost the sustainability, visibility and resilience of AZRB’s earnings,” RHB’s Ng said.