Stock With Momentum: Hock Seng Lee

-A +A

This article first appeared in The Edge Financial Daily, on March 21, 2016.


Hock Seng Lee Bhd (+ve)

SHARES of Hock Seng Lee Bhd (HSL) (fundamental: 2.4/3; valuation: 1.2/3) triggered our momentum algorithm for the second consecutive day on Friday as the stock’s price rose as much as 5.42% to RM2.14, before closing at RM2.10, still up 3.45%, after it announced that a HSL-led consortium has secured a new contract worth RM1.7 billion, a day after it bagged a RM750 million wastewater management system job in Kuching.

It saw some 12.15 million shares traded. In comparison its 200-days average volume is only around 406,498.

The consortium of HSL — Dhaya Maju Infrastructure (Asia) Sdn Bhd joint venture (JV) won the RM1.7 nillion contract from Lebuhraya Borneo Utara Sdn Bhd for the development and upgrading of the proposed Pan Borneo highway in the state of Sarawak; Phase 1: Bintangor Junction to Julau Junction and Sibu Airport to Sg Kua Bridge (including Batang Rajang Bridge).

The scope of works for the projects includes earth works, piling, drainage works, road works, interchanges, bridges and its related mechanical and electrical works and is estimated to take about 51 months for completion.

HSL has 70% equity in the consortium. “The contract is expected to contribute positively to the earnings and net assets of the HSL Group as the project progresses during the contract period,” it said in a bourse filing on Friday.

It is its third contract win in two months. At the end of last month, the consortium of Larsen & Toubro Limited, HSL and Larsen & Toubro (East Asia) Sdn Bhd was awarded a contract by Sarawak Energy Bhd worth RM280.9 million. On Thursday, HSL announced that it bagged the RM750 million wastewater management system job for the Kuching city centre through the consortium of Kumpulan Nishimatsu Hock Seng Lee, of which HSL has 75%.

At its current stock price, HSL is trading at a trailing P/E ratio of 15.15 and is 1.75 times its book value.