News Eversendai announced that it has secured
multiple steelstructural projects in Qatar and India which is worth
RM152m. The steel-structural projects are: (i) the Gabbro Terminal
Expansion project in the Mesaieed state, Qatar (RM78.7m), (ii) Skylight
Steel Package 2 of the Mall of Qatar, Doha (RM16.3m), and (iii) J3
Project in Jamnagar, Gujarat, India (RM57.1m).
Comments We are Positive on the projects as these multiple steelstructural jobs will boost its outstanding orderbook to RM1.7b (2-3 years visibility).
Year-to-date, including these new contracts, the group has secured RM903.5m, making up 90% of our FY14 total orderbook replenishment assumption of RM1.0b.
Assuming average net margin of 8%, these projects will contribute about RM12.2m per annum to their bottomline.
Outlook It is commendable that Eversendai has secured a sizeable amount of contracts this year and has even exceeded our expectations as we did not expect the group to hit our replenishment rate so quickly. We view this positively as it signals the group’s commitment in delivering its promises to investors.
We also reaffirm our view that Eversendai’s recently-secured O&G-related job, namely the RM580m liftboat contract, is a prelude of bigger things to come within this segment. In fact, the segment’s facilities, i.e. 200k sq mtr fabrication yard in
RAK Maritime City Zone, is almost completed and hence, greater capacity for more of such jobs in a foreseeable future.
Elsewhere, the group is eyeing more steel structural jobs in the Middle East, particularly in Commonwealth Independent States (CIS) countries such as Azerbaijan. The group is also sanguine about Dubai hosting the World Expo in 2020 which will require construction of more convention centres and thus, opportunities for steel-structural market leaders such as Eversendai.
Forecast No changes in earnings. Although the group has almost met our replenishment target for the year, we opt to be conservative and maintain our assumptions for now. We may revise earnings upwards if the group secures another substantial contract.
Rating Upgrade to OUTPERFORM (from MARKET PERFORM)
The group has been making good progress in terms of meeting investors’ target. Previous earnings’ disappointments are likely priced in at current levels, implying limited downside risks. Additionally, the stock could surprise on the upside if it secures another substantial contract in FY14 which results in higher-than-expected order book replenishment compared to our assumption of RM1.0b, which is entirely believable considering that it has achieved 90% of our target within 6 months.
Valuation Maintain our TP at RM1.18 based on unchanged fwd-PER of 9x on FY15 EPS. Our applied PER is on par with small-cap construction peers’ average PER of 8x-10x.
Risks to Our Call Higher-than-expected order book replenishment
Lower-than-expected progress in construction projects
Higher-than-expected input costs.
Source: Kenanga
Comments We are Positive on the projects as these multiple steelstructural jobs will boost its outstanding orderbook to RM1.7b (2-3 years visibility).
Year-to-date, including these new contracts, the group has secured RM903.5m, making up 90% of our FY14 total orderbook replenishment assumption of RM1.0b.
Assuming average net margin of 8%, these projects will contribute about RM12.2m per annum to their bottomline.
Outlook It is commendable that Eversendai has secured a sizeable amount of contracts this year and has even exceeded our expectations as we did not expect the group to hit our replenishment rate so quickly. We view this positively as it signals the group’s commitment in delivering its promises to investors.
We also reaffirm our view that Eversendai’s recently-secured O&G-related job, namely the RM580m liftboat contract, is a prelude of bigger things to come within this segment. In fact, the segment’s facilities, i.e. 200k sq mtr fabrication yard in
RAK Maritime City Zone, is almost completed and hence, greater capacity for more of such jobs in a foreseeable future.
Elsewhere, the group is eyeing more steel structural jobs in the Middle East, particularly in Commonwealth Independent States (CIS) countries such as Azerbaijan. The group is also sanguine about Dubai hosting the World Expo in 2020 which will require construction of more convention centres and thus, opportunities for steel-structural market leaders such as Eversendai.
Forecast No changes in earnings. Although the group has almost met our replenishment target for the year, we opt to be conservative and maintain our assumptions for now. We may revise earnings upwards if the group secures another substantial contract.
Rating Upgrade to OUTPERFORM (from MARKET PERFORM)
The group has been making good progress in terms of meeting investors’ target. Previous earnings’ disappointments are likely priced in at current levels, implying limited downside risks. Additionally, the stock could surprise on the upside if it secures another substantial contract in FY14 which results in higher-than-expected order book replenishment compared to our assumption of RM1.0b, which is entirely believable considering that it has achieved 90% of our target within 6 months.
Valuation Maintain our TP at RM1.18 based on unchanged fwd-PER of 9x on FY15 EPS. Our applied PER is on par with small-cap construction peers’ average PER of 8x-10x.
Risks to Our Call Higher-than-expected order book replenishment
Lower-than-expected progress in construction projects
Higher-than-expected input costs.
Source: Kenanga
Winners and losers from the Johor power plant deal
Tan
Sri Francis Yeoh's controversial remarks caused all eyes to be trained
on YTL projects including the power plant in Johor. – The Malaysian
Insider pic, June 18, 2014.Be honest, did anyone seriously
believe YTL Power International Bhd would voluntarily withdraw from a
consortium that won a contract to build and operate a power plant in
Johor through direct negotiation and opt instead to compete for the
project through an open tender?Remember this is 100-day Malaysia where all is forgotten after 100 days.
It is reasonable to suggest that after another week or two of negative headlines, the issue of the power plant would have been relegated to the back pages, allowing the main beneficiaries – the Sultan of Johor, YTL and a certain individual closely-connected to the PM – to carry on as usual.
That business as usual did not happen in this case is cause for a small celebration. The Malaysian Insider looks at the winners and losers in this episode. WINNERS
1) Malaysia and Malaysians
It is always a good day when transparency and governance trumps opaque business practices – the type of wheeling and dealing that has cost Malaysia dearly and saddled the government and taxpayers with white elephants and projects with bloated overruns.
2) Tan Sri Dr Ahmad Tajuddin Ali and Datuk Mohd Nasir Ahmad
Both of them are great believers in competitive bidding and have tried to make sure that the country's powerful and well-connected also abide by the rules of the game.
They were prepared to give up their positions and perks on the Energy Commission on a matter of principle. Too few Malaysians in positions of influence are willing to stand up for what is good for Malaysia.
3) The Tenaga Nasional unions, the opposition, the media and non-governmental organisations.
This was a rare occasion when enough forces and institutions came together and applied sustained pressure on the award of the 4A. In the last few days, it has become clear to YTL that the fallout from Tan Sri Francis Yeoh's comments on crony capitalism would be a millstone on this power plant project, with the potential to completely shutdown the project and make members of the consortium outcasts.
The final nail came with the call by the unions for the government to withdraw the award of the project through direct negotiation. Prime Minister Datuk Seri Najib Razak is likely to ignore the media and the chattering class but the idea of clashing with unions seems to unnerve him.
4) YTL
You don't think they qualify as winners? Of course they do. They exit the consortium on their own, but yet are still in pole position to win the right to build the 4A power plant through competitive bidding.
The simple fact is this: loath them or love them, YTL is a well-run company with an excellent balance sheet. Add to this their powerful partner from the state of Johor and they must be favourites to win the contract to build the power plant in Johor.
LOSERS
1) Tan Sri Francis Yeoh
Surely the moral of the story is this: silence is the best policy when you and your shareholders have benefited enormously from close ties with the government. Yeoh is an erudite businessman and has built up a reputation for delivering top-class products, Pangkor Laut and the restored Majestic Hotel comes to mind. But the man will not win any popularity contest even on Mars.
Some people dislike his self promotion and others just detest the fact that the IPP concession given to YTL during the Mahathir era was lopsided. It was silly of him to stand before his peers at the Pemandu function and even touch on the topic of crony capitalism.
Heck, this was like preaching to most cynical of cynics: men and women who believed that YTL's financial muscle today is the result of solid political connections.
His comments started a firestorm and resulted in all eyes being trained on YTL projects, including the 4A power plant.
* Datuk Seri Dr Maximus Ongkili
The Minister of Energy, Green Technology and Water got himself in knots when trying to justify the government's decision to award the gas turbine power plant through direct negotiation. He said it was necessary to fast track the project because of the "uncomfortable" reserve margin and the May 7 outage which hit six states.
But as the Association of Water and Energy Research Malaysia (Awer) pointed out the issue of reserve margin would be addressed when nine new power plants are up and running between 2015 and 2019. Ongkili was caught out and he will look even sillier now that YTL has pulled out of the consortium and the process to award the contract will have to start all over again.
* Datuk Seri Najib Razak
Expect his already rocky relationship with the Sultan of Johor to worsen. Not because he pulled the plug on the project. He did not.
But there will be questions asked down south why other royals were allowed to have their own power plants without controversy.
Also, why didn't the prime minister insist on competitive bidding from the start? After all, even the award of the power plant to the controversial 1MDB went through the proper process.
What made this power plant so special? – June 18, 2014.
Winners and losers from the Johor power plant deal
Tan
Sri Francis Yeoh's controversial remarks caused all eyes to be trained
on YTL projects including the power plant in Johor. – The Malaysian
Insider pic, June 18, 2014.Be honest, did anyone seriously
believe YTL Power International Bhd would voluntarily withdraw from a
consortium that won a contract to build and operate a power plant in
Johor through direct negotiation and opt instead to compete for the
project through an open tender?Remember this is 100-day Malaysia where all is forgotten after 100 days.
It is reasonable to suggest that after another week or two of negative headlines, the issue of the power plant would have been relegated to the back pages, allowing the main beneficiaries – the Sultan of Johor, YTL and a certain individual closely-connected to the PM – to carry on as usual.
That business as usual did not happen in this case is cause for a small celebration. The Malaysian Insider looks at the winners and losers in this episode. WINNERS
1) Malaysia and Malaysians
It is always a good day when transparency and governance trumps opaque business practices – the type of wheeling and dealing that has cost Malaysia dearly and saddled the government and taxpayers with white elephants and projects with bloated overruns.
2) Tan Sri Dr Ahmad Tajuddin Ali and Datuk Mohd Nasir Ahmad
Both of them are great believers in competitive bidding and have tried to make sure that the country's powerful and well-connected also abide by the rules of the game.
They were prepared to give up their positions and perks on the Energy Commission on a matter of principle. Too few Malaysians in positions of influence are willing to stand up for what is good for Malaysia.
3) The Tenaga Nasional unions, the opposition, the media and non-governmental organisations.
This was a rare occasion when enough forces and institutions came together and applied sustained pressure on the award of the 4A. In the last few days, it has become clear to YTL that the fallout from Tan Sri Francis Yeoh's comments on crony capitalism would be a millstone on this power plant project, with the potential to completely shutdown the project and make members of the consortium outcasts.
The final nail came with the call by the unions for the government to withdraw the award of the project through direct negotiation. Prime Minister Datuk Seri Najib Razak is likely to ignore the media and the chattering class but the idea of clashing with unions seems to unnerve him.
4) YTL
You don't think they qualify as winners? Of course they do. They exit the consortium on their own, but yet are still in pole position to win the right to build the 4A power plant through competitive bidding.
The simple fact is this: loath them or love them, YTL is a well-run company with an excellent balance sheet. Add to this their powerful partner from the state of Johor and they must be favourites to win the contract to build the power plant in Johor.
LOSERS
1) Tan Sri Francis Yeoh
Surely the moral of the story is this: silence is the best policy when you and your shareholders have benefited enormously from close ties with the government. Yeoh is an erudite businessman and has built up a reputation for delivering top-class products, Pangkor Laut and the restored Majestic Hotel comes to mind. But the man will not win any popularity contest even on Mars.
Some people dislike his self promotion and others just detest the fact that the IPP concession given to YTL during the Mahathir era was lopsided. It was silly of him to stand before his peers at the Pemandu function and even touch on the topic of crony capitalism.
Heck, this was like preaching to most cynical of cynics: men and women who believed that YTL's financial muscle today is the result of solid political connections.
His comments started a firestorm and resulted in all eyes being trained on YTL projects, including the 4A power plant.
* Datuk Seri Dr Maximus Ongkili
The Minister of Energy, Green Technology and Water got himself in knots when trying to justify the government's decision to award the gas turbine power plant through direct negotiation. He said it was necessary to fast track the project because of the "uncomfortable" reserve margin and the May 7 outage which hit six states.
But as the Association of Water and Energy Research Malaysia (Awer) pointed out the issue of reserve margin would be addressed when nine new power plants are up and running between 2015 and 2019. Ongkili was caught out and he will look even sillier now that YTL has pulled out of the consortium and the process to award the contract will have to start all over again.
* Datuk Seri Najib Razak
Expect his already rocky relationship with the Sultan of Johor to worsen. Not because he pulled the plug on the project. He did not.
But there will be questions asked down south why other royals were allowed to have their own power plants without controversy.
Also, why didn't the prime minister insist on competitive bidding from the start? After all, even the award of the power plant to the controversial 1MDB went through the proper process.
What made this power plant so special? – June 18, 2014.
Winners and losers from the Johor power plant deal
Tan
Sri Francis Yeoh's controversial remarks caused all eyes to be trained
on YTL projects including the power plant in Johor. – The Malaysian
Insider pic, June 18, 2014.Be honest, did anyone seriously
believe YTL Power International Bhd would voluntarily withdraw from a
consortium that won a contract to build and operate a power plant in
Johor through direct negotiation and opt instead to compete for the
project through an open tender?Remember this is 100-day Malaysia where all is forgotten after 100 days.
It is reasonable to suggest that after another week or two of negative headlines, the issue of the power plant would have been relegated to the back pages, allowing the main beneficiaries – the Sultan of Johor, YTL and a certain individual closely-connected to the PM – to carry on as usual.
That business as usual did not happen in this case is cause for a small celebration. The Malaysian Insider looks at the winners and losers in this episode. WINNERS
1) Malaysia and Malaysians
It is always a good day when transparency and governance trumps opaque business practices – the type of wheeling and dealing that has cost Malaysia dearly and saddled the government and taxpayers with white elephants and projects with bloated overruns.
2) Tan Sri Dr Ahmad Tajuddin Ali and Datuk Mohd Nasir Ahmad
Both of them are great believers in competitive bidding and have tried to make sure that the country's powerful and well-connected also abide by the rules of the game.
They were prepared to give up their positions and perks on the Energy Commission on a matter of principle. Too few Malaysians in positions of influence are willing to stand up for what is good for Malaysia.
3) The Tenaga Nasional unions, the opposition, the media and non-governmental organisations.
This was a rare occasion when enough forces and institutions came together and applied sustained pressure on the award of the 4A. In the last few days, it has become clear to YTL that the fallout from Tan Sri Francis Yeoh's comments on crony capitalism would be a millstone on this power plant project, with the potential to completely shutdown the project and make members of the consortium outcasts.
The final nail came with the call by the unions for the government to withdraw the award of the project through direct negotiation. Prime Minister Datuk Seri Najib Razak is likely to ignore the media and the chattering class but the idea of clashing with unions seems to unnerve him.
4) YTL
You don't think they qualify as winners? Of course they do. They exit the consortium on their own, but yet are still in pole position to win the right to build the 4A power plant through competitive bidding.
The simple fact is this: loath them or love them, YTL is a well-run company with an excellent balance sheet. Add to this their powerful partner from the state of Johor and they must be favourites to win the contract to build the power plant in Johor.
LOSERS
1) Tan Sri Francis Yeoh
Surely the moral of the story is this: silence is the best policy when you and your shareholders have benefited enormously from close ties with the government. Yeoh is an erudite businessman and has built up a reputation for delivering top-class products, Pangkor Laut and the restored Majestic Hotel comes to mind. But the man will not win any popularity contest even on Mars.
Some people dislike his self promotion and others just detest the fact that the IPP concession given to YTL during the Mahathir era was lopsided. It was silly of him to stand before his peers at the Pemandu function and even touch on the topic of crony capitalism.
Heck, this was like preaching to most cynical of cynics: men and women who believed that YTL's financial muscle today is the result of solid political connections.
His comments started a firestorm and resulted in all eyes being trained on YTL projects, including the 4A power plant.
* Datuk Seri Dr Maximus Ongkili
The Minister of Energy, Green Technology and Water got himself in knots when trying to justify the government's decision to award the gas turbine power plant through direct negotiation. He said it was necessary to fast track the project because of the "uncomfortable" reserve margin and the May 7 outage which hit six states.
But as the Association of Water and Energy Research Malaysia (Awer) pointed out the issue of reserve margin would be addressed when nine new power plants are up and running between 2015 and 2019. Ongkili was caught out and he will look even sillier now that YTL has pulled out of the consortium and the process to award the contract will have to start all over again.
* Datuk Seri Najib Razak
Expect his already rocky relationship with the Sultan of Johor to worsen. Not because he pulled the plug on the project. He did not.
But there will be questions asked down south why other royals were allowed to have their own power plants without controversy.
Also, why didn't the prime minister insist on competitive bidding from the start? After all, even the award of the power plant to the controversial 1MDB went through the proper process.
What made this power plant so special? – June 18, 2014.
没有评论:
发表评论