UEM’s prospects in New Zealand, UK and M’sia remain positive

KUCHING: UEM Edgenta Bhd’s ( UEM) operations prospects in New Zealand, UK and Malaysia have been viewed as positive while its Opus offers growth potential once recovery is seen in Australia and Canada.

In a report, the research arm of Hong Leong Investment Bank Bhd ( HLIB Research) said, following a briefing with the company, it noted that in New Zealand (49 per cent of Opus revenue), the outlook remains positive with opportunities in transport and network management as well as rural water supply.

It said, the UK saw its best performance yet with orderbook percentage growing from 55 to 67 per cent while orderbook percentage also remains high in Malaysia at 67 per cent where it is pursuing contracts for the East Coast Highway 2 and Pan Borneo Highway (Sabah).

“Despite completion of the Nor th South Expressway ( NSE) fourth lane widening, management is eyeing on continued growth.

“This will be driven by pavement structural overlay for the NSE, recently awarded state road maintenance for Selangor ( RM109 mill ion), upcoming major highways ( WCE, DUKE, DASH, SUKE and SKLIA), and utilities relocation works for the MRT2 and LRT3,” it added.

As for its operations in East Malaysia, HLIB Research pointed out that UEM’s Integrated Facilities Management ( IFM) division should witness a decline this year as the subcontract from its associates in Sarawak ended in December while Sabah will cease in March.

“This has already been preempted by management and captured in our forecast,” it noted.

On its operations in Canada and Australia, the research team said outlook in Canada remained challenging following the oil price plunge leading to curtailed investments as well as environmental concerns on pipeline expansion.

“Work level for Opus Stewart Weir has been declining for the past 2 years and headcount has been swiftly cut to match this.

“While the Australian outlook continues to be hampered by the mining slowdown, management feels that the worse could possibly be over with orderbook percentage recovering from 25 to 33 per cent,” it added.