This article first appeared in The Edge Financial Daily on September 12, 2019

Eversendai Corp Bhd
(Sept 11, 42.5 sen)
Maintain sell with an unchanged target price (TP) of 29.5 sen: Eversendai Corp Bhd has recently secured seven structural steel projects totalling RM288 million in Dubai, Saudi Arabia, India, Singapore and the Netherlands. They are structural steel works.

In India, its works include those for three commercial building towers in Hyderabad, an airport main terminal building and an ITC boiler structure in Chennai.

In the Middle East, its works cover the Saudi Arabia Pavilion designed for the Dubai Expo 2020 and a suspension bridge project in the King Abdullah Financial District of Saudi Arabia.

In the Netherlands, its works include engineering and fabrication under a jacket and piles contract.

In Singapore, its works cover a data centre project.

With these job wins, Eversendai has secured RM890 million of new jobs year to date. Its outstanding order book is estimated at RM2.39 billion, translating into 1.4 times financial year 2018 (FY18) revenue.

Assuming a net margin of 2.2%, these projects are expected to contribute RM6.3 million in net profit or earnings per share of 0.8 sen throughout the construction period.

We maintain our FY19 to FY21 earnings forecasts as the job wins are within our FY19 order book replenishment assumptions of RM1.6 billion.

We make no change to our TP of 29.5 sen. We maintain our “sell” call as its lofty net gearing level of 1.07 times as at end-June remains a concern. — TA Securities, Sept 11