PETALING JAYA: HSS Engineers Bhd
remains positive on its outlook for financial year 2024 (FY24) and expects greater clarity on project flows by March or April.
Although the group did not provide any guidance on project wins for FY24 during its recent Malaysia Corporate Day, HSS expects 2024 to be a better year, according to CGS-CIMB Research.
It noted that in the first nine months of 2023, the group’s core net profit increased by 43% year-on-year, with project replenishment totalling RM300mil.
HSS has a tender book of RM442mil with historically a 50% success rate.
The research firm said the biggest setback for HSS was the further extension of the validity period for the Mass Rapid Transit 3 (MRT 3) civil packages.
“This is the fourth extension, with the period now ending in March 2024.
“Nevertheless, recent news from the Transport Minister that land acquisition will commence this year over a two-year timeline gave some assurance that awards could be imminent.
“HSS’ outstanding order book as at September 2023 was RM1.49bil, of which we estimate 60% to be its project management consultancy (PMC) contract for MRT 3,” said CGS-CIMB Research.
For its current PMC role in the MRT3 project, the research house added that it is still undergoing optioneering and land acquisition work and a strong pick-up in revenue recognition would be visible once the three large civil packages for MRT 3 are awarded.
“Once that happens, more engineers can be deployed and progress billings will pick up exponentially.”
However, the research house said the slack from MRT 3 delays could possibly be picked up by other projects, such as its lead design consultant role for Westports phase two, which is estimated to have a contract value of RM100mil to RM150mil.
It said the more immediate wins for the group could be from flood mitigation projects, the Penang Light Rapid Transit and Pan Borneo Sabah phase 1B.
A total of 33 high priority flood mitigation projects will be rolled out, costing about RM11.8bil under Budget 2024.
“Out of this, HSS has submitted engineering design bids for the smaller projects (worth RM500mil)
“For Pan Borneo Sabah phase 1B, the awards should happen soon. HSS was awarded a RM145mil PMC role for Pan Borneo Sabah phase 1A (15 packages) in April 2021.
“As phase 1B will comprise 19 packages worth RM15.7bil, we estimate the PMC role to be worth RM300mil,” added CGS-CIMB Research.
The company is currently working on overseas ventures in Japan to facilitate a private and public partnership project with the Japan Overseas Infrastructure Investment Corp for transport and urban development.
