The research house there are at least four mega transport infrastructure projects - the high-speed rail, KVDT2, LRT3 and ECRL - over the near term for Pestech to bid for the rail electrification packages.
It added that the current order book of RM1.6bil will support earnings growth for the next two years.
"Given the earnings growth potential of 26%/14%, at decent PER of 11x/10x for FY20/FY21, we believe the market has yet to appreciate the growth potential in this stock," it said.
The research house maintained its outperform rating on the stock with a target price of RM1.75 a share.
On Friday, Pestech announced its subsidiary had secured a contract worth about RM70mil from from PNG Power Ltd (PPL) for the EPC contract for PPL’s Port Moresby System Study and 11kV Distribution Upgrade.
THe project is funded by Asian Development Bank (ADB) jointly with the government of Papua New Guinea.
Kenanga is positive over the job win as it was secured through international competitive bidding, which shows Pestech's technical credentials were at international standards.
It said payment default for the contract was low as it was funded jointly by ADB.
"This is its 2nd contract win in two weeks, after the c.RM94m EPCC project in the Philippines and is also the 3rd project win for FY20, totalling YTD contract win to RM202.7m against our targeted order-book replenishment of RM750m," said Kenanga.