Kenanga positive over Pestech's contract wins

KUALA LUMPUR: Pestech International Bhd's recent contract win for the signaling system of the Gemas-JB Double Track Electrification project has lifted its order book to a record high of RM2.1bil.

"This is the third contract PESTECH has secured in FY19, totalling RM532mil and bringing the total current order-book to RM2.1bil which will keep them busy till 2021," said Kenanga Research

The total sub-contract value for Pestech's portion of work in the latest contract is RM75mil, bringing its contract value win from the Double-Track project to RM474mil after it earlier secured the EPC and maintenance of the electrification system worth RM399mil in end-September.

Kenanga is positive over the development, which is says has further built up its local participation for the signaling portion of the rail electrification. It said this is a good future reference in bidding for local and regional projects.

It added that Pestech's focus will switch beack to the region for the transmission line, substation and underground cable projects given the uncertainty over the ECRL and KL-Singapore HSR projects, while KVDT2 will be retendered.

Kenanga maintained its FY19-FY20 earnings estimates as the contract value falls within its assumptions.

It maintained its outperform rating on the stock with an unchanged target price of RM1.95.
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