KUALA LUMPUR: Following the resumption of construction activities and Sarawak’s state government focus on infrastructure developments, Hock Seng Lee Bhd’s (HSL)’s earnings are expected to remain healthy in the coming quarters.
According to MIDF Research, HSL’s prospects are also well-supported by its current order book of around RM1.8bil for construction activities, which would provide the earnings momentum.
This is mainly due to the prompt resumption of business operations and implementation of catchup strategies to ramp up progress in financial year 2021 (FY21), leading to potential higher progress billings.
“For instance, the group’s Miri Wastewater Project is at its tail-end, while more than two-thirds of the Package Seven for the Pan-Borneo Highway is completed.
“The group is targeting RM400mil to RM600mil worth of new order book replenishment in FY21,” it added.
For the second quarter (Q2) ended June 30, 2021 the group’s net profit jumped more than two-fold to RM8.75mil from RM3.95mil in the corresponding period a year before on higher contribution from the construction segment.
In Q221 its construction division posted profit before tax gain of 129% year-on-year to RM7.01mil, on the back of higher revenue at RM114.81mil. The research house believes that HSL is poised to be a beneficiary from the roll out of potential mega infrastructure projects in Sabah and Sarawak.
“This could include projects like Sarawak-Sabah Link Road, Coastal Road, Trans-Borneo Highway project, Sarawak Water Supply Master Plan and Water Grid, Sarawak Petrochemical Hub in the foreseeable term,” it said in a report yesterday.