CIMB Research retains Add for Eita, target price of RM2.40

KUALA LUMPUR: CIMB Equities Research is retaining its Add recommendation for EITA Resources Bhd and target price of RM2.40, which is 34.8% above the last traded price of RM1.78.

It on Tuesday maintained its EPS forecasts and target price, based on 12 times FY18F P/E (20% discount to its target 15 times P/E for the construction sector). 

“The discount is to reflect its small market cap and indirect exposure to the sector. Re-rating catalysts are Monday’s RM69.8mil contract and potential new orders from MRT2 and LRT3. Downside risks are a failure to win more jobs from MRT2 and LRT3,” it said.   

Eita’s core businesses include power equipment system and elevators.

It was appointed the designated contractor from Mass Rapid Transit Corporation Sdn Bhd (MRTC) for package L&E202, which is for the supply, procurement, installation, testing and commissioning of lift and escalator systems for V203, V204, V205 and V206.

CIMB Research said the job includes the completion of viaduct guideways at four different locations. 

The RM69.8mil job consists of 30 lifts and 77 escalators which will be supplied and installed at the four locations.

“The MRT2 job win is not a surprise to us as we expected the company to win at least one of the packages. The company targets the RM69.8mil contract to be completed by April 2022. 

“So far, two out of the four MRT2 lift packages have been awarded. We believe winning the package 3, which is for the underground lift job, would be positive for Eita. We believe Eita has a strong chance to win this package as it successfully completed the underground tunnel project for MRT1 in FY15-17,” it said.