KUALA LUMPUR:'' DRB-HICOM BHD []'s unit DRB-Hicom Defence Technologies Sdn Bhd securing of the government contract to'' supply 257 units of armoured wheeled vehicles (AWV) worth RM7.55 billion has prompted Hang DBS Vickers Research to set a new target price of RM3.80.
On Monday, March 7, DefTech accepted the letter of award from the federal government for the contract to supply armoured wheeled vehicles (AWV). The contract is to design and supply 257 units of the 8x8 AWV, which will be in eight variants. The contract valued at RM7.55 billion is for a period of seven years commencing from 2011.
HDBSVR said it expects a substantial rerating with this newsflow and as the market tags a higher premium to its services business.
'Our new TP of RM3.80 factors in some contribution from the Deftech contract - PE of 15x of CY12 earnings, tagged to our target market PE given it has virtually monopoly in this business,' it said.
It raised its FY12-FY13F EPS by 3%-10% by assuming contract tenure of seven years, 12% pretax margins, maintenance is back ended and there is three and 12-months recognition in FY12-13F respectively.
On Monday, March 7, DefTech accepted the letter of award from the federal government for the contract to supply armoured wheeled vehicles (AWV). The contract is to design and supply 257 units of the 8x8 AWV, which will be in eight variants. The contract valued at RM7.55 billion is for a period of seven years commencing from 2011.
HDBSVR said it expects a substantial rerating with this newsflow and as the market tags a higher premium to its services business.
'Our new TP of RM3.80 factors in some contribution from the Deftech contract - PE of 15x of CY12 earnings, tagged to our target market PE given it has virtually monopoly in this business,' it said.
It raised its FY12-FY13F EPS by 3%-10% by assuming contract tenure of seven years, 12% pretax margins, maintenance is back ended and there is three and 12-months recognition in FY12-13F respectively.
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