Tuesday, November 1, 2011

OSK Research maintains FV for Hock Seng Lee at RM1.61

KUALA LUMPUR (Nov 1): OSK Research is maintaining its fair value for Hock Seng Lee at RM1.61 after the company secured a RM90.28 million contract from the Sarawak Public Works Department for a water treatment plant.

HSL received the letter of acceptance on Oct 28 from the department for the new water treatment plant, reservoir and associated facilities for the proposed Samalaju water supply in Bintulu.

OSK Research on Tuesday including this recent win, it estimates that HSL has secured close to RM250 million worth of jobs year-to-date.

'Management maintains that it would be able to hit the full-year target of RM400 million, which is in line with our assumption,' it said.

The research house said a slew of projects are in the pipeline for implementation in Sarawak under the SCORE initiative, including a technical training school (RM250 million), a 600MW coal-fired plant in Balingan, the 1,000 MW Baram hydro dam, the Samalaju-Tg Manis rail link and various rural road networks.

'Maintain BUY, RM1.61 FV. As the total job wins are still within our RM400 million replenishment target for FY11, we maintain our earnings forecast for HSL. Our FV of RM1.61 is based on 10 times FY12F earnings, which is in line with its one-year forward PER mean,' it said.

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