HLIB bullish on Mitrajaya on contract win, sets RM1.95 target price
KUALA LUMPUR: Hong Leong Investment Bank Research (HLIB) has maintained its “buy” call on Mitrajaya Holdings Bhd with RM1.95 target price after the company secured a RM160 million contract to build a higher learning institution.
Yesterday, HLIB said the contract, Mitrajaya’s second for the year, brought the value of its year-to-date (YTD) job wins to RM434 million compared with RM920 million for financial year (FY) 2016.
“The order book stood at RM1.5 billion as at end FY2016 and assuming a burn rate of RM220 million in the first quarter of this year, coupled with YTD job wins of RM434 million, this would place the current order level at RM1.7 billion.
“This translates to a healthy cover ratio of two times on FY2016 construction revenue,” the investment bank added.
The research firm also said Mitrajaya’s management was gunning for RM1 billion in new job wins for FY2017, which is now at 43 per cent and in line with its target.
Meanwhile, Kenanga Investment Bank Bhd maintained the target price for Mitra at RM1.49 with an “outperform” rating on the risks of lower-than-expected margins, delay in construction works, lower-than-expected order book replenishment and lower-than-expected property sales.
Mitrajaya shares closed at RM1.37 on Bursa Malaysia yesterday.