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Wednesday, May 28, 2014

RHB Research maintains Buy on Ahmad Zaki


KUALA LUMPUR: RHB Research has maintained its Buy call on Ahmad Zaki with a fair value of 96 sen, adding that the group is a good small-cap proxy to public infrastructure spending given its involvement in the construction of the Klang Valley mass rapid transit (MRT) project and various government facilities.
It said on Wednesday that Ahmad Zaki’s 1Q14 net profit met expectations at 27% of RHB’s full-year forecast/consensus estimates respectively.
“We project Ahmad Zaki’s net profit to hit the RM30mil mark in FY15 from less than RM6mil in FY13,” it said.
RHB said Ahmad Zaki’s current outstanding construction orderbook of RM2bil, which can already last for 2-3years will surge by 80% to RM3.6bil when the RM1.55bil East Klang Valley Expressway (EKVE) hits the ground over the immediate term.
“We also like Ahmad Zaki for its stable of concession assets comprising a highly profitable bunkering operation at the Kemaman Supply Base in Terengganu, theInternational Islamic University of Malaysia (IIUM) Teaching-Hospital under construction (26% completed) and the EKVE under planning.
“In addition, there is tremendous value in its 21,000 ha oil palm plantations (23% planted) in West Kalimantan, Indonesia,” it said.
RHB expects Ahmad Zaki’s net profit to surge five times between FY13 and FY15, backed largely by improved construction profit and reduced plantation losses.

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