Eversendai Corp Bhd (Nov 22, RM1.64)
Maintain buy at RM1.65 with target price of RM2.17: Eversendai has clinched the mechanical erection work for the Manjung power plant, worth RM132 million. The company has consistently secured new jobs since its listing and is on track to meet our job wins expectation of RM1.2 billion for 2011 (year-to-date wins: RM973 million). We continue to like Eversendai for its bright job flow prospects, coming from key pump-priming markets, where projects are populist demand-driven and have lower timing risk. The stock trades at a low nine times 2012 price-earnings ratio (PER). Maintain “buy” and target price of RM2.17 (12 times 2012 PER).
Eversendai will undertake the mechanical erection work for the boiler and auxiliary equipment for the Manjung Unit 4 in Perak. The job was awarded by its long-time power plant partner Alstom Services Sdn Bhd at a contract value of RM132 million. We expect a net margin of around 12%, with work to start in March 2012 and stretching over four to five years. Additionally, we still see more new job potential within this Manjung project as Eversendai is also in negotiation for several other packages (fabrication work).
We believe the company may secure more jobs (RM400 million at least) in the next three months. Job flow is expected to come from the Tanjung Bin power plant expansion project in Johor (where Eversendai is part of the Alstom consortium) and structural steel works in the Middle East. With the inclusion of the Manjung job, Eversendai’s outstanding order book is lifted by 7% to RM1.6 billion, which should sustain its quarterly earnings growth momentum for the next year.
We maintain our 2012/13 earnings forecasts, having imputed job win potential in our earnings model. We estimate that 67% of our 2012F RM1.2 billion revenue forecast (+13% year-on-year) is already in hand, based on the current order book. Eversendai continues to stand out from its local construction peers due to its geographical diversification and superior margins. — Maybank IB Research, Nov 22
This article appeared in The Edge Financial Daily, November 23, 2011.
Maintain buy at RM1.65 with target price of RM2.17: Eversendai has clinched the mechanical erection work for the Manjung power plant, worth RM132 million. The company has consistently secured new jobs since its listing and is on track to meet our job wins expectation of RM1.2 billion for 2011 (year-to-date wins: RM973 million). We continue to like Eversendai for its bright job flow prospects, coming from key pump-priming markets, where projects are populist demand-driven and have lower timing risk. The stock trades at a low nine times 2012 price-earnings ratio (PER). Maintain “buy” and target price of RM2.17 (12 times 2012 PER).
Eversendai will undertake the mechanical erection work for the boiler and auxiliary equipment for the Manjung Unit 4 in Perak. The job was awarded by its long-time power plant partner Alstom Services Sdn Bhd at a contract value of RM132 million. We expect a net margin of around 12%, with work to start in March 2012 and stretching over four to five years. Additionally, we still see more new job potential within this Manjung project as Eversendai is also in negotiation for several other packages (fabrication work).
We believe the company may secure more jobs (RM400 million at least) in the next three months. Job flow is expected to come from the Tanjung Bin power plant expansion project in Johor (where Eversendai is part of the Alstom consortium) and structural steel works in the Middle East. With the inclusion of the Manjung job, Eversendai’s outstanding order book is lifted by 7% to RM1.6 billion, which should sustain its quarterly earnings growth momentum for the next year.
We maintain our 2012/13 earnings forecasts, having imputed job win potential in our earnings model. We estimate that 67% of our 2012F RM1.2 billion revenue forecast (+13% year-on-year) is already in hand, based on the current order book. Eversendai continues to stand out from its local construction peers due to its geographical diversification and superior margins. — Maybank IB Research, Nov 22
This article appeared in The Edge Financial Daily, November 23, 2011.
