KUALA LUMPUR: Affin Hwang Capital research believes the recent share price correction in HSS Engineers Bhd offers a buying opportunity given the group's prospects for expanding its order book.
In a note, the research house reiterated its buy call on HSS with a target price of RM1.30 on optimism over the group's ability to win new contracts.
Affin Hwang said HSS's 2Q19 results to be released on Aug 15 are expected to be disappointing, perhaps resulting in the 18% share price correction over the last one month.
"With the slow progress billings on its remaining order book of RM558m and amortisation of goodwill, it could incur a small loss or show a small profit in 2Q19," it said.
The research house said HSS's consultancy contract for about RM97mil of remaining works for the ECRL project was only reinstated on July 11 with additional deisgn works worth RM5mil.
"Earnings contribution from this project will only start to be recognised in 3Q19 and ramped up in 4Q19," it said.
Meanwhile, the independent consultant engineer contract for the Klang Valley MRT Line 2 was reduced to RM158.7mil from RM188.3mil previously.
Affin Hwang added that further amortisation of the goodwill for the acquisition of SMHB Engineering amounting to about RM3mil will be recognised in 2Q19 and 2H19.
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