HLIB maintains buy on GKent on consortium news

KUALA LUMPUR: Hong Leong Investment Research maintained a buy call on George Kent Malaysia Bhd with a target price of RM4.31.

This comes on the back of news that it was joining forces with Siemens, Alstom, Italian State Railways (ISR) and PORR towards a joint proposal for the EPC and O&M portion of the KL-Singapore High Speed Rail project.

George Kent had announced in October 2017 that they were teaming up for the HSR AssetsCo role, but with the inclusion of the other three companies, the research firm believes the consortium is in an even stronger position for the role.

"We are positive on this recent news as getting the AssetsCo role will further elevate GKent’s prominence in the rail system’s scene. 

"Track record wise, GKent is undertaking the LRT extension systems, MRT2 track works and LRT3 PDP role. GKent’s huge net cash pile of RM384m will come in handy for the AssetsCo bid."

Hong Leong Investment Research believes George Kent is in a prime position to participate in upcoming mega rail projects such as the ECRL and HSR. 

"It also boasts solid financials with above industry ROE of 24%, 3 year projected earnings CAGR of 12% and net cash position of RM0.68/share (18% of market cap)."

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