KUALA LUMPUR: Affin Hwang Capital Research said HSS Engineers Bhd
's tptal new contracts of RM300mil year to date have exceeded its earlier assumptions for FY18E.
The research firm said HSS remains its top small-cap construction sector buy and raised its target price to RM1.84 from RM1.70.
It was announced yesterday that HSS Engineers received a RM289.9mil contract to be the independent consulting engineer for the Klang Valley MRT Line 3 project.
"HSS was also appointed the ICE for MRT1 (RM110m share of contract) and MRT2 (RM205m contract value) previously and securing the contracts for all 3 MRT lines is a testament to its engineering consulting capabilities in undertaking railway projects," said Affin Hwang Research.
It added that the company has prospects to grow its current record-high order book of RM963mil further with potential projects it is bidding for including the Pan Borneo Highway Sabah, KL-Singapore High Speed Rail (HSR), Kuching LRT, Labuan-Menumbok Bridge Link and some water-related projects.
"We raise our fully-diluted EPS forecasts by 8-11% for FY18-20E to reflect a higher new contract assumption of RM523m in FY18E (from RM250m previously) while maintaining our RM300m assumption for FY19E.
"Applying the same target FY18E PER of 20x (based on global engineering consulting peer average), we raise our target price to RM1.84 from RM1.70 previously."
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