It said in a note that it is bullish on Advancecon's leading position in providing eathworks and securing new development projects.
It has also increased its orderbook to RM881mil from RM572mil prior to its listing, and is venturing into the solar power segment, which should boost earnings by 13% in FY24.
"On these factors and our upbeat outlook, this stock should trade at a higher 13x P/E (+1SD from the 5-year mean)," it said.
Advancecon expects the solar segment to provide a recurring income stream to complement its core business and civil engineering unit.
The company is aiming to book at least RM1mil in net profit from this business over the next 21 years.
According to RHB, its prospects for new orders in earthworks solutions are also positive, and could add 17 projects to its existing portfolio.
In FY21, Advancecon expects to return to optimal machine utilisation rates of 80% to 90%, driven by construction order book growth of RM300mil, of which RM70mil remains to achieve its annual replenishment target.
It is also the biggest winner of the East Coast Rail Link contracts in 2020-2021, clinching RM185mil in packages scored.
The new jobs are expected to enhance billings to existing works for the West Coast Expressway, which came up to c.42% of unbilled orders as of Dec 31, 2020, said RHB.