TRC announced that its wholly-owned subsidiary, Trans Resources
Corporation Sdn Bhd had accepted the offer from the Public Works
Department Malaysia (JKR) to construct and complete the refurbishment
and upgrading works for Parliament House of Malaysia (Phase 2B). The
contract sum is totaling RM191m, but no details were given on the
construction period. This came as no surprise as the Group had indicated
earlier that it might clinch another job soon in our meeting with the
Management back in June. Together with the RM414m building jobs secured
back in April, the total outstanding orderbook will now stand at
c.RM1.76bn from RM1.56bn previously. That said, we believe that earnings
will continue to be slow due to margin compression from higher material
costs and cost over-run for some of the on-going projects.
Construction outstanding orderbook increases to RM1.76bn, with the new job. Recall that the Group snagged a job i.e.RM414.6m back in April from KL Eco City Sdn Bhd (a subsidiary of SP Setia, the master developer of KL Eco City near MidValley Megamall) to construct the foundation works and superstructure of an office tower. Together with the new job, TRC‟s new job win has already reached c.RM606m, which is way better that FY13‟s job replenishment of RM170m and higher than our expectations of RM300m of new jobs per annum. That said, earnings are kept unchanged for now as the KL Eco City building job is only projected to complete by 4Q2017. In addition, TRC‟s earnings might still be under pressure due to higher material costs and cost over-runs that could affect margins longer than expected. A recent accident at its LRT site (for the third time) is also worrying.
Maintain Neutral and TP of RM0.54. Granted, TRC is a good proxy to the Klang Valley MRT project and SCORE projects but we believe until there‟s stabilization in the Group‟s earnings, we would prefer to take a conservative stance.
Source: PublicInvest Research - 9 Jul 2014
Construction outstanding orderbook increases to RM1.76bn, with the new job. Recall that the Group snagged a job i.e.RM414.6m back in April from KL Eco City Sdn Bhd (a subsidiary of SP Setia, the master developer of KL Eco City near MidValley Megamall) to construct the foundation works and superstructure of an office tower. Together with the new job, TRC‟s new job win has already reached c.RM606m, which is way better that FY13‟s job replenishment of RM170m and higher than our expectations of RM300m of new jobs per annum. That said, earnings are kept unchanged for now as the KL Eco City building job is only projected to complete by 4Q2017. In addition, TRC‟s earnings might still be under pressure due to higher material costs and cost over-runs that could affect margins longer than expected. A recent accident at its LRT site (for the third time) is also worrying.
Maintain Neutral and TP of RM0.54. Granted, TRC is a good proxy to the Klang Valley MRT project and SCORE projects but we believe until there‟s stabilization in the Group‟s earnings, we would prefer to take a conservative stance.
Source: PublicInvest Research - 9 Jul 2014
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