AmInvest Research Reports

VESTLAND - Wins Site Clearance Contract Worth RM195mil

AmInvest
Publish date: Wed, 10 Jul 2024, 10:07 AM
AmInvest
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Investment Highlights

  • We maintain BUY call on Vestland with a higher fair value of RM0.70/share (from RM0.62/share previously) by raising our FY24F/FY25F/FY26F earnings by +9.2%/+12.8%/+5.0% on its latest job win.
  • Our revised FV, implies an upside potential of 55%, is based on an unchanged FY25F PE of 9x - the average for small- cap construction companies, plus a 3% premium for its superior 4-star ESG rating.
  • Vestland announced that it has won a civil construction works job worth RM195mil for site clearance, earthworks, drainage, pavement and road furniture works for the Kota Bahru-to-Kuala Krai Expressway in Kelantan.
  • This contract is a positive surprise, as it is not in its tender book.
  • Works will start 19 July 2024 with expected completion in 2026 over 24 months.
  • With this project in hand, the total job wins for the year is RM525mil, halfway to its annual target of RM1bil. The order book is now RM2.2bil, by our estimates.
  • Vestland typically makes 10%-13% gross margin for civil works. For this project, we assume a GP margin of 12%.
  • Vestland is currently trading at only 6x FY25F P/E, which is a deep discount to its peers that are trading at 8x-28x.

Source: AmInvest Research - 10 Jul 2024

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