KUALA LUMPUR: UEM Edgenta
’s latest contract win has been received with a neutral perspective as it is expected to contribute only less than 1% in earnings to the company in the financial year 2016-2017.
MIDF Equities Research said on Wednesday the 24-month long contract is for the provision of operation and maintenance of Central Utilities Facilities (CUF) for Biotechnology Park at Iskandar Puteri, Johor.
The contract was awarded by Malaysian Bio-Xcell Sdn Bhd which is a 60:40 joint-venture (JV) company between Biotech Corp Investment Holdings Sdn Bhd and UEM Sunrise Berhad.
The research house has highlighted in its report on Wednesday, that the contract award is not unexpected as, under a separate JV between UEM Edgenta and UEM Sunrise, UEM Edgenta was given a first right of refusal to undertake the provision of property and township management services for projects under UEM Sunrise in Johor.
Despite its neutral view on the contract, MIDF Research expects more contracts to be awarded to UEM Edgenta under this JV, moving forward.
While UEM Edgenta’s main revenue contributor, Opus Group is facing a continuous challenging operating environment, MIDF Research believes that the company will be more flexible in terms of engaging in potential new opportunities, thanks to its robust balance sheet position.
The research house has maintained its neutral call on UEM Edgenta and left the target price unaltered at RM3.41.
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