KUALA LUMPUR (Dec 17): Earnings forecasts for Taliworks Corp Bhd were raised after the company won a contract from Pengurusan Air Selangor Sdn Bhd to develop a package under Phase 1 of the Sungai Rasau water treatment plant for RM602.43 million.
Hong Leong Investment Bank Research analyst Edwin Woo in a note on Friday (Dec 17) raised his earnings forecasts for Taliworks for the financial year ending Dec 31, 2022 (FY22) and FY23 by 11% to 20% after factoring in the contract win.
“We were positively surprised by the job win as we did not anticipate repeat wins from the same project. We expect profit before tax (PBT) margins in the range of 6% to 8%,” he said, adding that the job brought Taliworks' new contract wins to RM896.3 million.
He maintained his "buy" call on Taliworks and revised up his target price (TP) to 98 sen from 97 sen post earnings adjustments.
“Taliworks’s defensive source of earnings should anchor its healthy sustainable yield of 7.7%. We continue to favour Taliworks for its consistent earnings delivery amid [Covid-19] pandemic uncertainties bolstered by an attractive dividend profile,” he said.
Meanwhile, Affin Hwang Investment Bank research analyst Loong Chee Wei reduced his FY21 core earnings per share (EPS) forecast for Taliworks by 1% to reflect the impact of securing new contracts in late-2021.
However, assuming a PBT of 10% for the new contracts, he raised his core FY22-23 EPS forecasts by 18%-29%.
He also noted that the positive earnings impact of the new contracts would be partly offset by a reduction in contribution from the company's proposed acquisition of solar assets.
According to him, the latest contract win exceeded his previous assumption of new contracts worth RM300 million for 2021 to 2023.
“Taliworks’s remaining order book increased to a new record high of about RM900 million, supporting its construction earnings growth over the next three years,” he said.
Loong upgraded his call on Taliworks to "buy" from "hold" and revised up his TP to 95 sen from 86 sen to reflect higher construction-segment valuation.
At 10.23am on Friday, Taliworks was half a sen or 0.58% higher at 86 sen, valuing the group at RM1.72 billion.
Year to date, the counter had risen 5.49%.