This article first appeared in The Edge Financial Daily on January 23, 2019

Vizione Holdings Bhd
(Jan 22, RM1.02)
Maintain buy with a higher target price (TP) of RM1.20: We remain positive on the growth trajectory of Vizione Holdings Bhd following the recent strong quarterly financial results. As such, we upgrade our TP to RM1.20 based on 10 times price-earnings ratio (PER) for the financial year ending 2020 (FY20) premised on the higher end of small-mid-cap construction companies’ FY20 PER range of six times to 11 times. We believe the valuation is justified due to Vizione’s decent net margin and solid order book.

Since our initiation report on Oct 29, 2018, the group has continued to deliver favourable results amid the challenging construction sector with its share price improving from 91 sen to RM1.02. Vizione recorded a more than fourfold jump in net profit to RM34.5 million for the first half of FY19 year-on-year. The second quarter of FY19 also marked the fifth consecutive quarter-on-quarter growth in net earnings after the acquisition of Wira Syukur Sdn Bhd. Additionally, net margins have also improved during the quarter due to prudent measures on undertaking certain higher-margin private property and infrastructure projects.

Vizione has been consistently winning contracts including the recent RM377.6 million worth of roadwork projects in Kota Kinabalu, Sabah. This brings the group’s total construction order book to hit RM3.95 billion providing earnings visibility until 2022. Among the more notable projects is the RM407.5 million Penang Mega Infrastructure package 2 with commencement expected by the first half of 2019. The project is deemed as a stepping stone for the group to secure the remaining packages of the mega project with total value estimated at RM6.3 billion. — Rakuten Trade Research, Jan 22