HSS executive vice chairman Tan Sri Kuna Sittampalam (right in yesterday's AGM pic) said the group
KUALA LUMPUR: Affin Hwang Capital Research raised its FY18-FY20 earnings forecast by 0.2%-10.3% as it expects stronger earnings in Q4.
It also accelerated progress billings for existing projects given the group’s stronger 1H18.
The research house on Thursday reaffirmed its Buy call with higher 12-month target price of RM1.18, based on regional peer’s FY19 price earnings ratio (PER) of 22x, compared to RM0.78 previously.
“We believe HSS is in a position to weather the expected slowdown in new contract awards given the EPS enhancement and better profit margin from the SMHB Engineering Sdn Bhd acquisition.
“HSS remains our top sector smallcap BUY,” it said in a note.
The research house added that the expected completion of the acquisition of water treatment concessionaire, Syarikat Pengeluar Air Sdn Bhd (SPLASH) by the Selangor state government coupled with potential water tariff hike will support government spending to upgrade water supply and distribution.
Water-related contracts are likely to be rolled out next year after resolving the stalemate in the SPLASH acquisition.
“This is positive for HSS following its acquisition of SMHB Engineering, which is the largest local engineering consulting firm in the water sector,” it said.
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