Positive on Pestech's RTS rail electrification contract


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KUALA LUMPUR: Pestech International Bhd received a boost to its order book and proved its technical capability after securing the cross-border rail electrification project for the 4km rapid transit system link between Malaysia and Singapore.

Keannga Research said it is positive on the win, which brings the group's year-to-date total contract wins to RM335mil officially for FY21, in addition to its outstanding order book of RM2.2bil as at February 2021.

The contracts will keep Pestech busy until 2026 with the majority of completion timeline scheduled for the next two to three years, it added.

While the RM64.95mil contract from RTS Operations Pte Ltd is not big, it will make a good reference for future bidding for overseas projects.

"With its technical capability coupled with past contract references, Pestech is still actively bidding for power infrastructure projects, including rail electrification jobs, both in local and overseas markets," said Kenanga.

Meanwhile, the group has entered its seasonally strong 2H period, especially in Cambodia where work progress will speed up during the dry season.

Key local projects namely MRT2 and KVDT as well as the Cambodian Tatay project are progressing to advanced stages, which means better margins in the coming quarters, said the research house.

"We continue to like this niche utility infrastructure play which could potentially benefit from the revival of mega rail electrification projects domestically and the fast-growing energy infrastructure development market in Indochina.

"Thus, we keep our 'outperform' rating on the stock with unchanged target price of RM1.46 based on 3-year PER mean of 13.8x," it said.
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