Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Research House: INTER PACIFIC
Hock Seng Lee Bhd (HSL)
(May 26, RM1.40)
Recommend outperform at RM1.32 with target price of RM1.74: Infrastructure development in Sarawak continues to intensify, driven by the government's stimulus packages and the Sarawak Corridor of Renewable Energy (Score) initiatives. These offer good potential for HSL. With the first quarter financial results outperforming the corresponding quarter of 2009, HSL is positioned for another year of growth.
HSL's revenue increased by 18.7% year-on-year (y-o-y) in 1QFY10 to RM92.4 million. Due to seasonal factors, the first quarter revenue is traditionally slower, hurt by rain and festivities. Thus, 1QFY10 revenue made up only 19.3% of our full-year forecast.
Nonetheless riding on the wave of infrastructure development in Sarawak and drawing on its marine engineering strength, revenue contribution from the construction segment increased by 19.6% y-o-y to RM84.8 million while property development improved by 9.4% y-o-y to RM7.6 millon.
HSL's 1QFY10 net profit margin had climbed by 9.5% y-o-y on the back of a significant step-up in operating income for its construction and property development segment. Operating margin for HSL's construction and property development had jumped by 31.6% and 44.4% respectively.
Following the completion of an educational institution in Bintulu and road works at Panchor, Kuching, HSL's bid of several infrastructure projects for FY10 has been rewarding. It had procured two new road projects, a building work contract in Samarahan and a wharf at Muara Tebas, bringing its order book to RM1.7 billion with RM1.1 billion outstanding.
Following the robust sales of FY09 year-end launching of The Leaf, which achieved more than 90% sales in about four months, HSL had planned to introduce a mixed development worth RM900 million along the Kuching-Samarahan Expressway. Modelled after The Leaf which adopted a high-end gated and guarded concept, the mixed development named La Promenade is expected to be launched in the 2HFY10, providing a growth catalyst to its property development segment.
Other ongoing projects included Vista Aman in Samarahan, Highfields in Batu Kawa, Lavender Hills along Kuching-Serian Road and Vista Parade.
We believe contribution from the property segment would be stepping up from about 15% of HSL revenue or between RM8 million and RM9 million post launching of La Promenade. ' Inter-Pacific Research, May 26
This article appeared in The Edge Financial Daily, May 27, 2010.
Company Name: HOCK SENG LEE BHD
Research House: INTER PACIFIC
Hock Seng Lee Bhd (HSL)
(May 26, RM1.40)
Recommend outperform at RM1.32 with target price of RM1.74: Infrastructure development in Sarawak continues to intensify, driven by the government's stimulus packages and the Sarawak Corridor of Renewable Energy (Score) initiatives. These offer good potential for HSL. With the first quarter financial results outperforming the corresponding quarter of 2009, HSL is positioned for another year of growth.
HSL's revenue increased by 18.7% year-on-year (y-o-y) in 1QFY10 to RM92.4 million. Due to seasonal factors, the first quarter revenue is traditionally slower, hurt by rain and festivities. Thus, 1QFY10 revenue made up only 19.3% of our full-year forecast.
Nonetheless riding on the wave of infrastructure development in Sarawak and drawing on its marine engineering strength, revenue contribution from the construction segment increased by 19.6% y-o-y to RM84.8 million while property development improved by 9.4% y-o-y to RM7.6 millon.
HSL's 1QFY10 net profit margin had climbed by 9.5% y-o-y on the back of a significant step-up in operating income for its construction and property development segment. Operating margin for HSL's construction and property development had jumped by 31.6% and 44.4% respectively.
Following the completion of an educational institution in Bintulu and road works at Panchor, Kuching, HSL's bid of several infrastructure projects for FY10 has been rewarding. It had procured two new road projects, a building work contract in Samarahan and a wharf at Muara Tebas, bringing its order book to RM1.7 billion with RM1.1 billion outstanding.
Following the robust sales of FY09 year-end launching of The Leaf, which achieved more than 90% sales in about four months, HSL had planned to introduce a mixed development worth RM900 million along the Kuching-Samarahan Expressway. Modelled after The Leaf which adopted a high-end gated and guarded concept, the mixed development named La Promenade is expected to be launched in the 2HFY10, providing a growth catalyst to its property development segment.
Other ongoing projects included Vista Aman in Samarahan, Highfields in Batu Kawa, Lavender Hills along Kuching-Serian Road and Vista Parade.
We believe contribution from the property segment would be stepping up from about 15% of HSL revenue or between RM8 million and RM9 million post launching of La Promenade. ' Inter-Pacific Research, May 26
This article appeared in The Edge Financial Daily, May 27, 2010.
No comments:
Post a Comment