TP RM3.3

HSS Engineers (HSS MK)
BUY (maintain) Price Target: RM0.82
Up/Downside: +115.8% Previous Target (Rating): RM0.82 (BUY)
Multiple growth drivers
➢ We hosted HSS management for a meeting with 12 institutional investors
➢ The RM998m Project Management Consultant (PMC) secured contract for the
Klang Valley MRT Line 3 (MRT3) project provides good earnings visibility
➢ HSS is expanding its engineering services to other industries and pursuing
overseas expansion to diversify geographically. HSS remains a sectortop BUY
with an unchanged target price (TP) of RM0.82, based on a 2023E PER of 18x
MRT3 PMC contract provides long-term earnings visibility
HSS accepted the Letter of Appointment from MRT Corporation on 4 August 2022 to
provide PMC services for the MRT3 project with an estimated value of RM997.9m over
the expected duration of 11 years. We understand that the revenue will mostly be
recognised in the first 8 years for the engineering design and project management of the
civil works portion of the MRT3.
Geographical diversification and expansion of services
HSS’ remaining order book of RM1.5bn will provide earnings visibility over the coming 5-
8 years. New contract wins hit a new high of RM1.09bn YTD 2022. HSS is still targeting
another RM150-200m of contract wins in 2H22 with a tender book of RM400m currently.
Some ongoing bids/negotiations for new projects are the Bayan Lepas and Johor LRTs,
Sarawak Metro, Westport Phase 2, PJD Link Highway, KL-Karak Highway Widening,
Kuching Airport expansion, and flood mitigation, water and sewerage projects. HSS is
also expanding geographically by pursuing Asian projects in collaboration with Japanese
consultants and expanding its services to other industries such as the telecommunication
(5G network infrastructure) and digital technology (data centre) sectors.
Private placement and bonus issue of warrants
HSS proposed a private placement of new shares up to 20% of share capital and bonus
issue of 1 warrant for every 3 existing shares held on 17 August 2022. We gather that the
private placement is a contingency plan and the new equity issuance will only be required
if HSS needs working capital for its projects. Indications are working capital requirements
for its projects can be met with internally-generated funds and bank borrowings. Net
gearing is low at 0.1x as at end-2Q22. Hence, new equity funding from the proposed
private placement and exercise of warrants may not be required, in our opinion.
Remains a top sector BUY
The core 2023E PER of 8x is attractive considering its strong 2-year core EPS CAGR of
45% in 2023-24E. We maintain our BUY call with a 12-month TP of RM0.82, based on
target 2023E PER of 18x. Key risks are political uncertainties and slow roll-out of
infrastructure projects.

https://einvest.affinhwang.com/news/archive/Affin%20Hwang%2020220914%20HSS%20CU.pdf

TP 0.82 by Affin Hwang Investment Bank

It's too early to predict as to what price it can go. But it's worth hold and buy at this price given its good business recovery prospects.

Buy on weakness and enjoy enormous profit when its recovered and grow.

The lower sales revenue and profit was affected by chip and container shortages and port congestion. However, these issues are expected to resolve gradually as these issues have been easing with more economies reopen. To bet on IQGROUP's business recovery, this price correction will be a great opportunity to buy IQGROUP at a lower price.

https://www.thesundaily.my/local/penang-plans-10-housing-projects-to-help-people-own-house-DB8102948

https://www.theedgemarkets.com/article/record-steel-prices-inject-life-longsuffering-industry

The whole market is plunging, the current lockdown is likely to hurt ASTINO earnings for 4Q21, but I believe it's earnings will rebound strongly after the lockdown was ended due to favourable demand and high selling price.

Only China's Steel price is correcting, the rest of world in increasing.

NIIS has been open-tendering since 2018, the winners for the project are likely to be announced anytime soon.

National Integrated Immigration System (NIIS) is a multi-billion project under Ministry of Home Affairs Malaysia.

NIIS is the project to replace Malaysia's traditional immigration system developed in the 90's

Budget for Ministry of home affairs will be debated and voted next week.

Any announcements regarding to the contracts for NIIS, MyKad, Passport will be announced very soon.

Budget for Ministry of home affairs has been allocated, any projects regarding public security will be announced soon.

"Denmark agrees deal to have 775,000 electric cars by 2030"

https://www.investing.com/news/technology-news/denmark-agrees-deal-to-have-775000-electric-cars-by-2030-2362213

Vehicle sales up by 5.2%, this should be a good news for D&O.

https://www.theedgemarkets.com/article/october-vehicle-sales-52-yoy-56670-secondhighest-monthly-sales-year

Utradenow yes I'm am a WA holder.

Plus, the contract for producing Raw MyKad to the Gov will be ending in Dec 2020. The renewal or extension of this contract will be announced anytime soon.

"The Board expects the prospect for the coming quarters to be brighter in line with the national economic recovery phase and new
business opportunities in the areas of public security, public health and also e-commerce."

That's the Prospects Statement in the last quarter report. This shows that the directors are confident enough with their performance in the next quarters.

From July - Sep, Business and Production activities operate as usual, Dsonic's performance would be better than the last two quaters.

DSONIC-WA holder here

DSONIC would have a brighter performance in the next quarter report. Buy now and hold still... You wouldn't get DSONIC at this price once the qr report is out.
Next Qr report will be released at the end of this month. Nov.