New high for Dagang NeXchange Bhd
KUALA LUMPUR: Shares in Pestech International Bhd
climbed on Friday on news the company had bagged a US$100.2mil (RM444mil) contract from Alex Corp for the construction of electricity transmission lines from a hydro-power plant in Cambodia.
This is the single biggest contract secured by Pestech to date and the second electricity transmission contract awarded by Alex Corp to the company.
The stock jumped to a new high of RM1.77 on the opening bell. At 11.42am, the stock was trading at RM1.69, up five sen on volume of 17 million shares.
Kenanga Research, in a note, reiterated its outperform call on the stock with an unchanged target price of RM2.00. The latest contract win, Kenanga said, increased Pestech’s orderbook to RM1.7bil.
“While there is no disclosure of payment term in the announcement, we suspect the payment arrangement is likely to be the same as the previous arrangement of long credit term to Alex Corp which is over six years period with first payment only starting when the project is completed.” it said.
The firm noted that Pestech’s high receivables “look uncomfortable” but with the guarantee payment from state-owned utility Electricite du Cambodge which matches payment to supplier, this reduces cash-flows concerns at Pestech’s end.
Meanwhile, Kenanga Research also noted that Pestech is involved in a another major bidding process, in which the company stands a “high success chance” of winning.
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