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Tuesday, October 15, 2013

AZRB nudges higher as orderbook rises to RM3.8b

Source: http://www.thestar.com.my/Business/Business-News/2013/10/14/AZRB-nudges-higher-as-orderbook-rises.aspx

KUALA LUMPUR: Shares of Ahmad Zaki Resources Bhd (AZRB) rose to a high of RM1.05 amid a lacklustre broader market as its orderbook rose to RM3.8bil and analysts were upbeat about its outlook.

At 3.47pm, it was up three sen to RM1.03. There were 2.86 million shares done at prices ranging from RM1.01 to RM1.05.

The FBM KLCI slipped 0.14 of a point to 1,785.61. Turnover was 1.04 billion shares valued at RM653.46mil. There were 265 gainers, 409 losers and 299 counters unchanged.

Alliance Investment is maintaining a Buy on AZRB with a target price of RM1.20.

It had bagged a RM163mil contract for the new Air Police Base in Subang, bringing its orderbook to a sizable RM3.8bn (6.3 times construction revenue).

“We expect AZRB to clinch more jobs going forward. Potential jobs include the Langat 2 water treatment plant and Angkasapuri redevelopment.

“AZRB is also a potential beneficiary from Bumiputra carved out projects under the recently announced Bumiputra Economic Empowerment plan. No changes to estimates. We maintain BUY with RM1.20 TP,” said Alliance Research.

AZRB’s contract to build the new base was to replace the existing one at the Sungei Besi Airfield which has new been earmarked for development by 1MDB. The scope of works for the contract involves a hangar and a five-storey office block.

“With this recent award, AZRB’s year-to-date job wins stand at RM1.89bil vis-à-vis our full year assumption of RM1.8bil. We estimate AZRB’s orderbook balance to now stand at RM3.76bil, implying a very strong orderbook to construction revenue ratio of 6.3 times,” it said.

Alliance Research said this contract win vindicates our view on AZRB’s ability to continue securing government related contracts.

“We estimate that total contact wins from the government, its related entities and GLCs make up 89.4% of AZRB total job wins of RM6.5bil since 2005,” it said.

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