Price retracement offers chance to buy into Ekovest shares

PETALING JAYA: The recent retracement in Ekovest Bhd’s share price, which had hit a high in May, is an opportunity for investors to buy into the stock, UOBKayHian said.

Since hitting a high of RM1.46 on May 2, the stock dropped to a low of RM1.01 last Friday.

However, Ekovest’s share price started to climb again this week – the main catalyst being the launch of its Kuala Lumpur River City project on Tuesday, which saw its shares rising 12 sen to RM1.17.

The company’s share price ended four sen lower at RM1.13 yesterday.

At present levels, UOBKayHian said the stock is trading at a bargain, with a 2018 and 2019 price-to-earnings ratio of 15.4 times and 10.5 times respectively.

The research house said this was a 25% to 37% discount to contractor-concessionaire peers’ trading range, which is in the high teens.

“In addition, the launch of the KL River City by a prominent minister (Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor) also lifts investors’ confidence in the stock,” said UOBKayHian in a report yesterday.

Separately, UOBKayHian said the potential listing of the DUKE 1 and 2 expressways could result in more special dividend distributions.

“The next major catalyst for the group would be the eventual initial public offering of the DUKE 1/2 expressways, which are worth about RM1.9bil, based on its 60% stake.

“Assuming that it pares down its stake in the highway by a further 20%, the net cash inflow could be around RM632mil.”

UOBKayHian said the expressways could actually be worth a potential RM2.1bil, adding that a 20%-stake downsize would result in net cash inflow of up to RM700mil.

The research house also said Ekovest’s fundamentals remained intact, with construction as a primary growth driver.

“Presently, the group is armed with RM7bil worth of unbilled construction jobs, excluding the DUKE 2A expressway construction job that could be worth RM6.32bil.

“Including the potential DUKE 2A construction job, its outstanding order book would be a whopping RM13.1bil, representing a 14-times order book cover, which is one of the highest in the industry.”

While the company’s order book is near its all-time high, UOBKayHian said it expected this figure to grow further in the near term, as the group eyed several other large construction jobs within the Klang Valley, such as the RM1bil rehabilitation KL River City job.