KUCHING: Hock Seng Lee Bhd’s (HSL) first major contract win in 2014 is generally on track with analysts’ financial year 2014 (FY14) orderbook assumption.
According to analyst Iqbal Zainal from the research arm of Kenanga Investment Bank Bhd (Kenanga Research), the contract sum of RM73.7 million is on par with its FY14 total new orderbook assumption of RM600 million for HSL.
“Year to date (YTD) new contracts already accounted for 21.5 per cent of our assumed orderbook of RM600 million, “ Iqbal said.
Hence, Kenanga Research estimates, by now, HSL’s outstanding orderbook have reached RM1.22 billion from RM1.1 billion, adding that the orderbook will last two years.
“Assuming a 15 per cent net margin, this contract alone will contribute RM5.5 million per annum to bottom line until 2016,” he noted.
As for the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), this contract accounts for 13.4 per cent of its RM550 million new jobs assumption for HSL in FY14.
“With this new project, HSL’s outstanding order book will increase by 5.8 per cent to RM1.27 billion from RM1.20 billion,” it added.
Given HSL’s status as the market leader coupled with the vibrant Sarawak’s growth story, Kenanga Research has reaffirmed its view that the group is one of the major beneficiaries of the sustained development of infrastructure projects in Sarawak, driven by Sarawak Corrdior of Renewable Energy (SCORE) and the state’s urbanisation.
“This is evidenced from it consistently securing more than RM500 million worth of jobs per annum since 2012,” Iqbal pointed out.