KUCHING: Hock Seng Lee Bhd (HSL) has bright prospects moving forward on the back of a robust order book to which recently saw the addition of two infrastructure projects related to the Sarawak Corridor of Renewable Energy (SCORE).
The groups was awarded the two contracts worth RM81 million from Lembaga Kemajuan Bintulu for two infrastructure jobs, namely road works project worth RM64.5 million and drainage diversion works worth RM16.5 million.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) estimated that HSL’s outstanding orderbook (inclusive of the new contracts) stood at RM1.13 billion.
“Year-to-date, HSL has secured RM130 million worth contracts, accounting for 24 per cent of our RM550 million 2013 assumed new orderbook.
“As one of the major contractors in Sarawak, we reaffirm our view that HSL is one of the beneficiaries of the SCORE’s spilled over projects.
“We believe HSL will likely to meet or even exceed our 2013 new orderbook assumption given the fact that the SCORE’s Samalaju Industrial Park is now at the active construction phase (more than 30 per cent completed),” it said yesterday.
The research team maintained its forecasts for the group as the jobs value was within its 2013 new orderbook assumption of RM550 million.
“We like HSL as it is one of the ‘quality’ construction stocks that has solid balance sheet (net cash of RM0.36 per share) and strong delivery track record in Sarawak.
“It paid its highest ever dividend of four sen in FY12 (financial year 2012) and we expect the rate to be maintained in FY13 on the back of its cash pile,” MIDF Research noted.
As such, it remained bullish on the stock call with an unchanged target price of RM2.14 per share, pegged to a price earnings ratio multiple of 11 times in line with the five-year historical average.