HSS poised to gain from reactivation of mega jobs

CGS-CIMB Research also noted that HSS’ shares have an attractive risk to reward ratio.

PETALING JAYA: HSS Engineers Bhd (HSS) has a robust contract outlook as it can benefit from the reactivation of mega projects.

The company is in a sweet spot to ride the construction sector’s recovery cycle, according to CGS-CIMB Research.

It also expected this to take off from the second half of the year 2021.

“We forecast normalised total job wins of RM150mil per year from the financial year 2021 (FY21) to FY23. This is compared with RM27.3mil in FY20 due to Covid-19 and lockdowns, ” the research house said in its latest report.

CGS-CIMB Research also noted that HSS’ shares have an attractive risk to reward ratio.

The key potential contracts that could be secured by HSS included the MRT3, the Penang South Islands project and port infrastructure as well as water projects, it said.

“Given HSS’s long-standing industry track record, we believe the group will be able to tap both the private and public sectors for projects, with upside from its strategy to secure new domestic recurring income and overseas jobs, ” said CGS-CIMB Research.“We like HSS’s multi-disciplined electrical power management system business model as it enables the group to operate in various sub-sectors.

“In our view, this is even more of an advantage as the government executes its post-pandemic economic recovery strategies, especially the resumption of infrastructure projects, ” it added.

This could potentially lead to a substantial improvement in order book growth prospects, said CGS-CIMB.

The research house has initiated coverage on HSS with an “add” rating with a target price of 89 sen per share and it is pegged to a 2022 forecast target price to earnings ratio (PER) of 27.4 times.

This valuation is within the range of -1 standard deviation from its five-year mean price to earnings ratio of 44 times and comparable with its larger and more established global peers PER range of 22 times to 30 times.

“We feel this is justified in view of the construction sector’s turnaround prospects, the potential rollout of new infrastructure projects, HSS’s dominant position in the domestic EPMS space, and robust three-year earnings per share compounded annual growth rate of 31.8%, ” CGS-CIMB said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

HSS Engineers , mega jobs , MRT , projects ,


Next In Business News

US jobs report expected to show another strong increase
Wall St week ahead: Covid-19 fears reappear as a threat to market
US Black Friday shoppers tapered online splurge, as some returned to stores
Young people's perceptions, attitudes towards job security
Takaful records strong growth in 1H despite pandemic
CPO futures likely to trade lower next week
China's industrial profits growth accelerates in Oct
New COVID variant Omicron triggers global alarm, market sell-off
Top US diplomat for Asia to visit Malaysia and three other ASEAN countries
Oil settles down US$10/bbl in largest daily drop since April 2020

Others Also Read