KUALA LUMPUR (March 18): Hong Leong IB Research has upgraded Hock Seng Lee Bhd (HSL) to “Buy” with a target price of RM2.53 after HSL-Nishimatsu JV was awarded Package 2 of the Kuching Wastewater System worth RM750 million.

In a note today, HLIB Research said HSL’s share is RM563 million, the largest project secured, bringing year-to-date job wins to RM621 million.

It said HSL’s orderbook increases to RM1.2 billion (2x cover ratio), doubling from RM600 million in 4QFY15.     

“Margins for Package 2 likely higher than Package 1 as HSL is now the main contractor.

“Pan Borneo Highway will be the next kicker, potentially increasing orderbook by another 80% to RM2.2 billion.

“Upgrade to Buy, TP: RM2.53. Orderbook has surged and potential for more jobs are bright,” it said.