Eversendai Corporation Bhd
(Jan 27, 61 sen)
Maintain underperform with target price (TP) of 60 sen: Eversendai Corporation Bhd announced yesterday that it secured a contract worth RM184million from Reliance Industries Ltd of India. The job scope includes supply of steel materials, connection design, engineering and fabrication for the construction of the Dhirubhai Ambani International Convention and Exhibition Centre (DAICEC) in Mumbai. 

We are neutral on the news as this job is part of our financial year 2015 (FY15) jobs replenishment assumption. We believe the group could also participate in other packages in the project such as steel erection, which is potentially worth more than RM50 million.

Assuming 6% net margin, this job would contribute about RM8.3 million in FY15 or 15% of our FY15 estimated net profit forecast of RM54.6 million. Eversendai’s year-to-date new wins now stand at RM228 million, accounting for 22.8% of our total jobs assumption of RM1 billion.

Eversendai updated that its order book currently stands at RM1.6 billion with a bulk of it coming from the Middle East. Despite the group’s huge order book, we are cautious about the group’s earnings outlook in  the near term after seeing few rounds of earnings disappointment. We prefer to see the group demonstrate more consistent earnings delivery before we review our call/TPs.— Kenanga Research, Jan 27

This article first appeared in The Edge Financial Daily, on January 28, 2015.