KUALA LUMPUR (April 25): HSS Engineers Bhd (HSSEB) rose 2.15% in early trade this morning after AffinHwang Capital Research initiated coverage on HSSEB with a “Buy” rating at 93 sen and target price of RM1.20.

At 9.07am, HSSEB rose 2 sen to 95 sen with 1.10 million shares traded.

In a note today, the research house said HSS Engineers is the largest local engineering firm that provides engineering and project management services to construction companies and governments.

AffinHwang Capital expects HSS to benefit from the implementation of large-scale infrastructure projects in Malaysia given its impressive track record.

“We gather that it was appointed as a consultant to conduct scheme design and feasibility studies for the East Coast Rail Link (ECRL) and recently won the bid to provide reference design for the longest portion of the High Speed Rail (HSR).

“We initiate coverage on HSS with a Buy rating and RM1.20 target price based on CY18E PER of 15x.

“Its net cash of RM24.7m or RM0.08/share could support our assumed dividend payout ratio of 30% in FY17E, giving a net yield of 1.9%, which we think is reasonable for a growing company,” it said.