Mitra shows strong order-book replenishment visibility for FY18
KUCHING: With an healthy outlook of infrastructure and building jobs in financial year 2018 (FY18), contractor Mitrajaya Holdings Bhd (Mitra) is seen to have a strong order-book replenishment visibility for the year ahead.
According to MIDF Amanah Investment Bank Bhd (MIDF Research), Mitra’s order-book replenishment for FY18 is backed by a strong low of contracts possibly from several sources, of which Bank Negara Malaysia (BNM) is a part of given its close working relationship with Mitra which recently led to the acquisition of a RM2.0 billion 22.5 hectare tract of land from the government to develop education and training facilities.
Other sources are OSK Property’s RyanandMihocondominiumproject which has a gross development value (GDV) of RM756 million given that Mitra is currently already at work on OSK’s PJ Midtown project; the LRT3 station sub-packages and more rapid infrastructure jobs.
Most recently, the group bagged its first contract win for the year with the PPA1M apartment construction for a cool RM103.1 million on Tuesday (January 9).
MIDF Research is neutral on the win as it is well within theur FY18E replenishment target of RM1.0 billion.
Assuming price before tax (PBT) margins of 8 per cent, the research arm expects the PP1AM job to contribute circa RM2.0 million per annum to the group’s bottom-line for the next three years.
Beyond just building jobs, MIDF Research also believes that for FY18 Mitra will be a potential contender in mega rail projects for the east coast railway line (ECRL) and high speed rail (HSR) given that these projects are non-urban infrastructure jobs that fit into Mitra’s operating space.
“Unlike the MRT3 (urban job) which has higher risks of delays/cost overruns due to traffic conditions, the ECRL and HSR are greenfield projects that MITRA favours.
“On the back of the potential contract flows and a stronger balance sheet post rights issuance, we are positive over Mitra’s outlook,”
With that said, MIDF Research guided that it would be upgrading its FY18E replenishment target for Mitra to RM1.2 billion from RM1.0 billion.
The research arm also reiterated its ‘outperform’ call on the stock with a higher sum of parts derived cum/ex target price of RM1.20 million, post adjustment to their earnings forecast.