Sarawak Cable Bhd (Nov 21, RM2.00)
Maintain buy at RM2.05 with fair value of RM2.86: Maintain “buy” on Sarawak Cable (SCB) with an unchanged sum-of-parts-derived fair value of RM2.86 target price-earnings ratio of 9.6 times on FY12F earnings per share. Investor interest is increasing on the group’s deepening status as a direct play on Sarawak Energy Bhd’s (SEB) robust spending.
SCB is confident of securing a role in the upcoming 500kV transmission line spanning over 600km that links Bunut to Kuching in Sarawak. This is more so after it inked several memorandums of understanding with multinational power giants such as Sinohydro India’s KEC International Ltd and Siemens to solidify its bidding opportunities in power transmission contracts.
The Edge weekly revealed over the weekend that the pre-qualification stage of this massive backbone transmission line project worth about RM1.5 billion is more or less finalised. We understand that SCB is the only home contractor that has been shortlisted under a strict screening process by SEB.
End contracts for transmission line works could be out by this January. This should quickly be followed by substation works worth over RM1 billion.
We reckon that SCB’s competitive edge lies with its status as the only integrated transmission line specialist, particularly in the supply of power cables.
The group would also have more local knowledge (logistics, mobilisation and dealings with locals) than its international peers.
Beyond the 500kV line, SCB foresees an acceleration of transmission line jobs in Sarawak, including the Kuching-Kalimantan line, Miri-Baram line as well as linkages to Brunei. Near-term, it is close to securing a transmission line job within the Samalaju Industrial Park.
The group has also set aside some RM80 million to further its plans to develop mini-hydropower plants in Indonesia via a 65% stake in PT Inpola Mitra Elektrindo. Construction is scheduled to start by year-end.
We expect SCB to register strong earnings growth for its upcoming 3QFY11 results, scheduled to be out this week. This is even before any maiden contributions from its proposed acquisition of Trenergy Infrastructure Sdn Bhd, which is scheduled for completion by next month. — AmResearch, Nov 21
This article appeared in The Edge Financial Daily, November 22, 2011.
Maintain buy at RM2.05 with fair value of RM2.86: Maintain “buy” on Sarawak Cable (SCB) with an unchanged sum-of-parts-derived fair value of RM2.86 target price-earnings ratio of 9.6 times on FY12F earnings per share. Investor interest is increasing on the group’s deepening status as a direct play on Sarawak Energy Bhd’s (SEB) robust spending.
SCB is confident of securing a role in the upcoming 500kV transmission line spanning over 600km that links Bunut to Kuching in Sarawak. This is more so after it inked several memorandums of understanding with multinational power giants such as Sinohydro India’s KEC International Ltd and Siemens to solidify its bidding opportunities in power transmission contracts.
The Edge weekly revealed over the weekend that the pre-qualification stage of this massive backbone transmission line project worth about RM1.5 billion is more or less finalised. We understand that SCB is the only home contractor that has been shortlisted under a strict screening process by SEB.
End contracts for transmission line works could be out by this January. This should quickly be followed by substation works worth over RM1 billion.
We reckon that SCB’s competitive edge lies with its status as the only integrated transmission line specialist, particularly in the supply of power cables.
The group would also have more local knowledge (logistics, mobilisation and dealings with locals) than its international peers.
Beyond the 500kV line, SCB foresees an acceleration of transmission line jobs in Sarawak, including the Kuching-Kalimantan line, Miri-Baram line as well as linkages to Brunei. Near-term, it is close to securing a transmission line job within the Samalaju Industrial Park.
The group has also set aside some RM80 million to further its plans to develop mini-hydropower plants in Indonesia via a 65% stake in PT Inpola Mitra Elektrindo. Construction is scheduled to start by year-end.
We expect SCB to register strong earnings growth for its upcoming 3QFY11 results, scheduled to be out this week. This is even before any maiden contributions from its proposed acquisition of Trenergy Infrastructure Sdn Bhd, which is scheduled for completion by next month. — AmResearch, Nov 21
This article appeared in The Edge Financial Daily, November 22, 2011.
