PETALING JAYA: Pestech International Bhd, which has secured a RM64.95mil contract for works relating to the traction power supply of the Malaysia-Singapore Rapid Transit System (RTS) link assets, appears poised to benefit from the revival of mega rail electrification projects in the country and the fast-growing Indochina market.
Work on the four-km RTS link project will start immediately with targeted completion by September 2026.
Bagging the rail electrification project is a milestone of sorts for the power infrastructure group – signifying its technical capability in delivering full engineering, procurement, construction and commissioning (EPCC) projects as per international standards, said Kenanga Research.
Although the contract value is not big, the research firm said it is a good reference for future bidding of overseas projects
“We are positive on this win which tallies its year-to-date total contract wins to RM335mil for the financial year 2021 (FY21), on top of its outstanding order-book of RM2.2bil as at February 2021, ” it said in a note to clients. The projects are expected to keep Pestech busy until 2026.
Most are scheduled for completion in the next two to three years. However, Kenanga is keeping its FY21-FY22 estimates unchanged.
It also maintains its “outperform’’ rating on the stock with an unchanged target price of RM1.46 based on a three-year price earnings ratio mean of 13.8 times.
The research firm noted that Pestech is still actively bidding for power infrastructure projects, including rail electrification jobs, both locally and and abroad. The second half of the year is a seasonally strong period, especially in Cambodia as work progress will speed up during the dry season there.
Kenanga also sees better margins in the coming quarters with key local projects, namely, the Mass Rapid Transit 2 and the Klang Valley Double Track, as well as the Cambodian Tatay project, progressing to advanced stages.