KUALA LUMPUR (July 10): CGSCIMB IB Research has maintained its “Add” rating on EITA Resources Bhd at RM1.43 with an unchanged target price of RM2 and said EITA’s earnings could receive a boost from the installation of substation jobs from FY20F onwards.
In a note July 9, the research house’s Ivy Ng said she expects EITA’s group earnings in FY20F to be boosted by its 60%-owned unit TransSystem Continental S/B which is involved in the installation of sub-stations.
Ng said outstanding sub-station orderbook stood at RM317 million as at end-Mar 2019, with projects to be completed over the next 18-24 months.
“Its main customers are Tenaga Nasional Bhd and Sarawak Energy (Not listed).
“The power division recorded a RM900,00 pretax loss on a modest revenue of RM12.1 million in 1HFY19 in the initial stages of work done on the sub-stations. We expect better numbers from this division starting 2HFY19. We estimate that the PBT margin was about 10% for this division.
“The stock remains an Add as its valuation is attractive at 2020F 7x P/E, supported by a 4.9% dividend yield,” said Ng.