KUCHING: Hock Seng Lee Bhd (HSL) is expected to benefit the most from the Sarawak Corridor of Renewable Energy (SCORE) and the Pan Borneo Highway projects, analysts opine following a recent briefing by the management of HSL.
“We expect more contracts from SCORE and Pan Borneo Highway, with HSL expected to benefit the most for being Sarawak-based builder,” said Public Investment Bank Bhd’s research arm (Public Invest) in a note yesterday.
It said the group’s outstanding orderbook for its construction division stood at RM820 million with the group already clinching RM105 million worth of new projects year to date, including an access road and water intake project in the SCORE knowledge hub of Mukah.
“The management is guiding that HSL can maintain the higher than average margins due to its forte in marine engineering.
“As a specialist contractor, it is looking to maintain profit after tax margin at more than circa 10 per cent vis-à-vis other
peers.
“As for new jobs, the Group is working on securing the Phase 2 of the Kuching central sewerage project (more than RM500 million) and the first package of Pan Borneo Highway.
“As indicated in our earlier report, we believe HSL should be the frontrunner for Phase 2 sewerage job, given its track record in completing Phase 1 and also cost advantage for owning the Tunnel Boring Machines used in Phase 1.
“As for Pan Borneo Highway, the first package tender (35km highway) is closing on August 7 and it expects a new tender every three months from the mammoth project (total project value circa RM27 billion),” the research firm said.
As for property, Public Invest noted that HSL is targeting new sales worth RM70 million to RM80 million this year, which is better than historical average of RM50 million to RM60 million per annum.
“HSL’s undeveloped landbank stands at circa 890 acres in Sarawak with an estimated gross development value (GDV) of RM2.9 billion which among others include 70 acres, Samariang Aman II approved for mixed development, 200 acres, La Promenad approved for residential and commercial development, 200 acres Kemena land in Bintulu and 275.5 acres, Samariang Aman III.
“Upcoming projects include Vista Industrial park and a guarded and gated community in La Promenade,” it added.
Overall, the research firm maintained a ‘neutral’ call on the stock. It believed the stock is still fairly priced for now.