In a note, the research house said the group continues to face labour shortage, travel movement restrictions and disruption to material supplies.
It noted that the group's outstanding construction order book of RM1.8bil as at end-June will continue to provide earnings visibility into FY23.
However, the timing of revenue and profit recognition remains uncertain due to new continued high number of Covid cases in the state.
Announcing its 1H21 results yesterday, Hock Seng Lee's net profit of RM179mil came within Maybank IB's expectation but below that of consensus at 51% and 41% of full-year estimates respectively.
While the group recorded a strong year-on-year recovery in 2Q21 due to the normalisation of construction and property development, profits fell 4% quarter-on-quarter due to the full movement control order.
Maybank IB reiterated its FY21-23 earnings forecasts on the group.
Consequently it maintained its "hold" call on the stock with an unchanged target price of 97 sen a share pegged to 11x FY22 price-earnings ratio.
Within the construction sector, Maybank IB preferred picks are Gamuda Bhd and IJM Corp Bhd.