In a research note, it said its earnings estimates are RM35-40mil for 4Q18, which will be flat quarter-on-quarter but an improvement year-on-year (y-o-y).
This would bring full year earnings to MYR143-148m, within RHB's forecast of RM147m (earnings growth of 6.7% y-o-y).
"In FY18, it met its RM1.5bil target for new construction orders (outstanding orderbook: RM5.3bil), bucking the trend of a slowdown in the sector."
RHB noted that MRT Corp has reported overall construction for the Mass Rapid Transit 2 project is advancing smoothly at 42.6% as at mid-Jan 2019.
The 5ppts gain over three months matches Suncon's 5ppts advancement of works in 3Q18 for the project, suggesting that the project is well on track, it said.
Meanwhile, SUncon's RM2.2bil KRT3 package has barely been reflected in past quarters with progress at only 5% or RM157mil booked as at 3Q18.
"We gather that works for Light Rail Transit 3 (LRT3) are ongoing despite delays in executing new contracts. This should provide some support to 4Q18 earnings
"Looking ahead, in order to meet its new 2024 deadline, works have to progress at a pace of ~15ppts per year, which equates to ~MYR300m (14% of FY19F revenue) in billings per year for FY19F-24F, partly explaining our 11% YoY earnings growth for FY19F," said RHB.
Meanwhile, the research house added that the drop in prices of steel bars and ready-mixed concrete, if maintained, would offset potential margin compression from project cost rationalisation.
RHB maintained its buy call and target price of RM2.12.
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