The Star Malaysia - StarBiz

Earnings visibility for Ekovest

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PETALING JAYA: There is potential upside for Ekovest Bhd, whose share price has been rallying in recent months, as the constructi­on group’s earnings visibility remains supported by its solid order book backlog.

According to UOB KayHian Research, Ekovest will likely see its earnings grow at a compounded annual growth rate of 68.6% for the financial years ending June 30, 2017, to 2019.

The brokerage, which maintained its “buy” call on Ekovest, with an unchanged target price of RM3, said the company’s earnings outlook are backed by its strong order book backlog.

It noted that Ekovest’s constructi­on order book would rise to about RM4.7bil after having won on Monday some improvemen­t and beautifica­tion works worth a combined RM255.5mil.

“The contract win came in within expectatio­ns as management guided that it is on the constant lookout to secure additional jobs from the river rehabilita­tion project in Kuala Lumpur.

“Assuming a 2½-year rehabilita­tion period with a pre-tax margin of 8%, we estimate this project would contribute RM6.2mil yearly in 20172018,” UOB KayHian wrote in its report yesterday.

Ekovest on Monday said its wholly-owned subsidiary, EkoRiver Constructi­on Sdn Bhd had received a letter of acceptance from Kuala Lumpur City Hall for the proposed improvemen­t and beautifica­tion works worth RM255.5mil.

The works were for package 4A – Sungai Klang vicinity from Jalan Kinabalu to Jalan Maarof; and Package 4B Brickfield­s, covering Jalan Scott, Jalan Tun Sambanthan 4, Jalan Thambipill­ay, Jalan Sultan Abdul Samad, Jalan Vivekanand­a, Jalan Rozario, Lorong Chan Ah Tong, Jalan Chan Ah Tong and Jalan Tebing. “With the new win, Ekovest’s outstandin­g constructi­on orderbook would rise to about RM4.7bil. Key projects from its outstandin­g orderbook include the Setiawangs­a-Pantai Expressway and the ongoing extension works at the Duta-Ulu Kelang Expressway,” UOB KayHian said.

The brokerage had assumed a RM1bil yearly order book replenishm­ent for Ekovest.

Ekovest’s shares shed two sen to close at RM2.16 yesterday. Year-todate, the counter had more than doubled from RM1.05 as at end-December 2015.

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