George Kent is the project delivery partner for the Light Rail Transit from Bandar Utama to Klang.
KUALA LUMPUR: RHB Research is more positive about George Kent’s orderbook replenishment outlook after recently making a re-assessment on its latest tender book.
The research house said on Monday this led it to revise its orderbook replenishment assumptions to RM5.5bil for this year, which would near double the group’s existing orderbook to RM11.3bil (from RM5.8bil).
“Consequently, we revise our FY19-20 earnings higher by 10% and 27% respectively. We also revise our P/E in our sum-of-parts valuation to 17 times (from 15 times).
“This is to reflect our optimistic view on George Kent’s orderbook replenishment outlook and its increasing position as the proxy play for domestic rail-related infrastructure investments. Maintain Buy with higher RM5.03 TP (from RM4.16, 36% total return),” it said.
On the Mass Rapid Transit Line 3 (MRT3), it views George Kent’s (system works portion) consortium with MMC (BUY, TP: RM3.30) and Gamuda (BUY, TP: RM5.80) as having a very high chance of winning the MRT3 project.
In a recent media release, Mass Rapid Transit Corp Sdn Bhd (MRT Corp) stated that four consortiums have submitted turnkey tenders with financing for the MRT3 project, with the winner tentatively set to be announced by 1Q.
In the event the financing package proposed by the bidders was not favourable, MRT Corp was ready to revert back to the old financing structure, that is funding through DanaInfra.
“This effectively increases the chances of local bidders in securing the project vis-à-vis the sole overseas consortium from China.
Works for the RM55bil East Coast Rail Link (ECRL) project by China Communications Construction Co (CCCC) were slated to begin in January.
With this, the award of the system works package (a lagging item in rail projects), for which George Kent is tendering for, is expected to be announced this year.
“Given the group’s involvement in system works and its cooperation with CCCC on the MRT Line 2 (MRT2) project – as well as the construction of the Ampang Light Rail Transit (LRT) Line Extension via CCCC’s China Harbour Engineering Co Ltd unit – we are optimistic on GKent’s chances of winning the tender,” it said.
RHB Research said the government has proposed the building of four new hospitals and wards in Budget 2018, with total budget of RM2.35bil.
Banking on its experience and latest wins in this space – that is hospital projects currently in progress include Hospital Kuala Lipis – Phase 2, Hospital Tanjung Karang, and Hospital Endocrine (Putrajaya) – George Kent stands a strong chance in at least securing one of these projects this year.
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