Published: Monday June 18, 2012 MYT 10:51:00 AM
Updated: Monday June 18, 2012 MYT 3:08:09 PM
Maybank IB Research maintains buy call on Eversendai
The research unit said Eversendai's share price has fallen 13% (from a peak in March 2012) and is below its IPO price of RMR1.70 (listed July 2011).
"This is a stark dichotomy to its rising outstanding orderbook (+33% year to date) and earnings growth (first quarter 2012 net profit: +21% year-on-year). The construction landscape in Middle East is still vibrant and Eversendai is the frontrunner for the RM850mil Abu Dhabi International Airport (ADIA) structural steel job," said Maybank IB Research.
According to press reports, the main contractor for the US$6bil five-year ADIA expansion project will be officially announced this month. It is reported that the Arabtec-TAV-CCC consortium is the likeliest winner for the key component job (midfield terminal building) with the lowest bid of US$3bil. The tender process started in Jan 2011 and there are another three shortlisted bidders.
Maybank IB Research believes that Eversendai is in a strong position to clinch the structural steel works worth RM850mil as Eversendai is the only structural steel contractor which submitted its bid with a bond, it has a strong track record, being the only structural steel contractor appointed for the New Doha International Airport (NDIA Phase 1-3), despite changes in the main contractors, and ADIA is less challenging than NDIA, with ADIA's steel requirement of 70,000 tonnes versus NDIA's 90,000 tonnes (Phase 1-3).
The structural steel award may be given to the sub-contractor in two to three months after the appointment of the main contractor. The construction is slated to begin in end-2012 and the airport is expected to be operational by 2017.
Maybank IB Research said if Eversendai clinches this job, its outstanding orderbook will jump from its already historical high of RM1.9bil to RM2.8bil (+ 1.5 times), on par to big-cap WCT Bhd (RM2.8bil). The research unit also noted that additionally, Eversendai is on the cusp of securing another two high-value structural steel jobs (worth RM700mil) in Azerbaijan. Maybank IB Research is maintaining its forecasts for now, which assume job wins of RM1.3bil in 2012 (year to date wins: RM810mil) and RM1.5bil per annum for 2013-14.