CGSI Research also noted that Iraq’s infrastructure market offered opportunities and the Najat-Karbala rail project could be the next project win.
PETALING JAYA: A major hurdle has been cleared for HSS Engineers Bhd
’s Baghdad Metro project, paving the way for earnings recovery and improving operating cashflows in the second half of this year.
In a report to clients, CGS International (CGSI) Research also noted that Iraq’s infrastructure market offered opportunities and the Najat-Karbala rail project could be the next project win.
“Despite the geopolitical conflict in the Middle East, HSS believes the market represents an opportunity. It is looking to entrench its exposure in Iraq with the formalisation of another project, the Najaf-Karbala rail project, worth US$5.35bil.
“The company said it has learned from the initial teething problems for the Baghdad Metro and will ensure all processes are in place and will raise the performance bond within 21 days from the signing of the contract,” said the research house.
Meanwhile, the railway scheme approval for Malaysia’s Mass Rapid Transit 3 (MRT 3) in July and should pave the way for civil package awards in late 2026, it added.
Citing an analyst meeting on Aug 8, CGSI Research said it learned that a major hurdle to its Baghdad Metro project had been cleared as it received the completion certificate, officially issued by the mayoralty of Baghdad, for the first 10% milestone payment of RM10mil on July 16.
After Baghdad’s Planning Ministry’s approval, the research house said the next steps would be more commercial in nature while the timeline for the monies to be paid may range from 21 to 41 days.
It viewed this positively as this has been the key overhang for the share price, leading to a 47% derating over a 12-month period.
“As such, we expect better earnings delivery in the second half of this year and, more importantly, operating cash flow should swing back to the black in the fourth quarter of 2025 after showing negative RM12.6mil in the first quarter.
“Additionally, with all the requirements met in order to receive this first payment (performance bond, opening of branch office and registration of local company), we expect the subsequent milestone payments to be much quicker.” it said.
CGSI Research noted until June 25, the project management consultancy work for the Baghdad project had reached 45% and is slated for completion by end-2025.
