Headwinds ahead for Eversendai but FY16 backed by large orders

KUCHING: Eversendai Corporation Bhd ( Eversendai) will likely face challenges ahead in terms of volatile oil prices and its weakening operations in India.

However, analysts believe the company financial year 2016 ( FY16) is backed by sizeable orders from Malaysia and the Middle East.

In a report, the research arm of TA Securities Holdings Bhd ( TA Securities) said the group has set an ambitious target of securing RM2 billion new jobs in 2016.

“In near to medium term, Eversendai could potentially benefit from the upcoming mega projects in the Middle East to cater for major world class events such as the Qatar World Cup 2022 and Expo Dubai 2020.

“On the local front, opportunities could come from contracts for the construction of petrochemical plants in Pengerang, structural steel works for KL118 Tower and Project 3B Jimah Power Plant. Besides, Eversendai is also exploring various opportunities in the Southeast Asia region,” the research team opined.

However, it pointed out, in view of the current challenging market outlook, especially in the Middle East after the sharp plunge in crude oil price, it maintained its FY16 order book replenishment assumption at RM1.2 billion, which is lower than the Eversendai’s guidance.

“Having said that, we believe Eversendai is among the frontrunners for several jobs amounting to about RM500 million, which include KL118 structural steel works, package of steel works for Jimah Power Plant under Project 3B, Dubai Eye and a power plant in Thailand.

“Currently, it has an outstanding order book of RM1.7 billion of which about three quarters of the amount is expected to be recognised this year,” TA Securities commented.

Meanwhile, the research arm of Kenanga Investment Bank Bhd ( Kenanga Research) said, it is still concerned over Eversendai’s weakening operations in India.