KIMLUN: 目标价 RM 2.31 (OSK-10/5/12)

CONSTRUCTION (OVERWEIGHT) 
Sector News Flash: Jobs Galore From RM3.2bn MRT Projects

THE BUZZ

MRT Corp has awarded 4 work packages - comprising 3 viaduct packages and 1 depot work package - worth RM3.22bn involving the construction of the Sungai Buloh-Kajang (SBK) My Rapid Transit (MRT) line.

OUR TAKE

More details on the packages. According to MRT Corp's official statement, the viaduct packages  - codenamed v1 (Sungai Buloh'Kota Damansara), v4 (Section 17, PJSemantan portal), and v7 (Bandar Tun Hussein Onn'Taman Mesra)  - have been awarded to Syarikat Muhibah Perniagaan dan Pembinaan SB,  Sunway (BUY, FV: RM3.31), and  MTD Capital (NR) respectively.  This means that  five out of the  eight viaduct packages for the entire line have been dished out, with IJM (TRADING BUY; FV: RM6.55) and AZRB (NEUTRAL, FV: RM0.91) having clinched the other 2 packages previously. Meanwhile, the Sungai Buloh depot work package worth RM459m was awarded to TRC Synergy (TRADING BUY, FV: RM0.84).

Within expectations.There are a total of 27 work packages  involving  civil and infrastructure works as well as 11 packages of non-civil system works on the entire SBK line. Earlier, we had expected three contracts for the elevated portion to be awarded as early as  April. Although the awards  were  slightly delayed, we deem this largely within expectations, in line with MMC's previous guidance that 70%-80% of all the works are expected to be awarded by July this year.

No surprise on the  winners. This announcement means that two out of the  three names that we  alluded to previously, i.e.  MRCB (TRADING BUY, FV: RM2.50), Sunway, and TRC Synergy, have secured some works  relating to the SBK line  so far. The RM459m job for TRC turned out to be higher than our last guidance for RM200mRM300m,  which  we see as  a positive surprise since it boosts the company's  FY12 orderbook replenishment  to  RM495m vis-''-vis  our full-year replenishment target of RM500m. No changes to our earnings model for the time being, with our FV of RM0.84 maintained. Reiterate TRADING BUY on TRC.

OVERWEIGHT. We are positive on the progressive award of MRT contracts and expect to the news flow to surge  over the next few months as the momentum picks up going into 3Q12. Hence, we are  maintaining our OVERWEIGHT call on the sector, with Gamuda (BUY, FV: RM4.57) and KimLun (BUY, FV: RM2.37) as our Top Buys.

Source: OSK188