robert168 talk like pro.. haha.. have a check probably on press been done by mahathir.. project will be defer and it is not cancel.. or find method to reduce the cost 22/08/2018 08:26
this company not totally depending with this ecrl project. still have others project which already on going.. can say that you can't really find any company able to provide such engineering support in the markets
KUALA LUMPUR: Proprietary day traders (PDT) and intraday short selling (IDSS) activities were suspended for Gabungan AQRS Bhd and HSS Engineers Bhd for the remainder of the day.
This was after the stocks hit trade limits set by the stock exchange, having lost more than 15 sen or 15 per cent from their reference price on news on of the cancellation of East Coast Rail Link (ECRL).
The PDT and IDSS activities will only resume at 8.30am on Thursday.
Gabungan AQRS was the worst performer for Bursa Malaysia Construction Index as it lost about 10.22 per cent in a day to close to RM1.23.
HSS Engineers shares on the other hand were down 16.37 per cent to end the day at 94 sen.
Stock market analyst Nazarry Rosli said it was only a sentiment play for the two stocks.
"It was only a knee-jerk reaction. The sell-off was due to what was viewed as negative news.
“The impact on the ECRL cancellation is not very significant," he told NST Business.
The two stocks were also analysts' favourites, with 100 per cent "buy" calls despite the cancellation of ECRL project.
Gabungan AQRS has a consensus share price target of RM1.89, which is more than 50 per cent upside potential from the last price.
HSS Engineers meanwhile has more than 20 per cent upside potential with a consensus target price of RM1.16.
Normally if want to complete a project, few stages involves.
1. engineering studies and design 2. parts supplier 3. constructor company, person who actually construct the project.
based on my understanding, HSSEB is engineering company which provides engineering services and project management consultancy not a constructor. Looks back on the project timeline for HSR, they are expecting to construct on 2018 onwards and engineering studies been done since 2016.
same goes to ECRL. and construction began in August 2017. which means they already complete the engineering design and studies.
may refer to their webpage. check through what is the scope of work for the pass. NEVER EVER as a CONSTRUCTOR.
Aiya...Fact is fact...cancelled means cancelled..."even canceled for now "still means it's cancelled...PM has strong command of english.....Susann could be correct....it will retrace further...if ECRL cancellation no big deal, it would have been 1.30 yesterday, instead of 0.94.
Overvalue? Aiya many people said this one got 2 company inside. Before this they said put P/E aside due to aquisition. QR with 2 companies out already but is it good enough? Kah kah kah
Bla bla bla, a lot of babies here relying on ECRL, ECRL isn’t the only project they have right now, tomorrow you’ll see it fly above 1 so better start queuing ;)
News on ECRLcancellation is out and price reflected already. As for HSR, the uncertainty has been make known, again the market have taken reaction and factored in this uncertainty. Anymore cancellation coming? If not, then the price now is already good with not much downside. What would be in the news after the ECRL & HSR--- awards for water works in Selangor.. Penang LRT and +++ With the projects cancellation we witnessed HSS price went down. So, what would be the reaction with the award of water works, Penang LRT... we don't know when, but should be quite soon, right?
Thanks for the throwing... I acquired quite a bit on 21 August & a bit more today.
Background. HSSEB is the largest local engineering consultancy and management firm that provides engineering and project management services to construction companies and governments. HSS provides engineering and project management services including engineering design, project management, construction supervision and BIM services. HSSEB’s expertise lies in wide range of sectors including building and structures, urban infrastructure, roads and highways, railways and metro systems, airports, ports and harbours, transportation planning, power generation and distribution, water resources and supply as well as sewerage systems. Its client base mostly from Malaysia. HSSEB was listed in ACE Market in Aug 2016, and the Company was transferred its listing to the Main Market of Bursa Malaysia in September 2017.
Consistent margin, low-risk and high barrier of entry business model. Typically, the engineering consultancy fee is about 2-5% of total project costs. The largest cost item for HSSEB is manpower cost, which is about 1/3 of revenue and the rest more on admins, systems and sub-consultants. As consultancy business eliminate underlying risks for construction businesses namely fluctuation of raw material prices, land acquisition and other social and regulatory issues, this business should consistently giving decent and stable margins. More importantly, this business is strictly governed by authorities such as Board of Engineers, CIDB etc. This create high barrier of entry for new entrants.
ECRL cancellation is not a surprise. The worst have already been priced in after the sell-down post GE14 as the stock went down as low as 45 cents in end of May. Hence, the sell-off in Thursday after Tun M announced ECRL cancellation should be just a one-day knee-jerk reaction. In fact, the cancellation should be viewed positively as now it is very clear on what the government’s stance on ECRL is.
Water is the next theme for HSS. HSS has 100% stake in prominent and biggest water consultant company, SPMHB. Last quarter, this unit started to contribute to the group’s bottomline. The biggest water restructuring in Selangor just completed recently after the disposal of SPLASH. Now it is a time for Federal Government to start rolling out NRW program. Quoting an article in 2016 by The Edge, to reduce NRW, government needs at least RM13b. This is just to reduce to 25% not 0% yet. Hence this clearly would benefit HSS’s unit, SPMHB in a big way.
Penang infrastructure spending to continue to support the company’s future orderbook. At least another RM50b will be spent in Penang to improve its infrastructure network. HSS, being a biggest engineering consultant company, should also benefit from this.
Valuation wise, HSS is currently trading at FY19 PER of around 13x. Consultant firms are always trading at very high valuation due to its stable business model, high barrier of entry and superior ROE. As such, engineering consultancy firm always be a takeover target with huge premium. For example, last year, UEM Edgenta sold its engineering consultancy business, OPUS ex-Malaysia operations at 82% premium to OPUS’s last traded price. Globally, US-based engineering consultant company, Jacobs Engineering bought its rival C2HM at huge 70% premium to its market value USD2.85b.
Technically, HSSEB will likely to test RM1.05 and RM1.20 resistances before going back to its pre-GE14 level of RM1.40-1.70.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
robert168
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Posted by robert168 > 2018-08-22 08:27 | Report Abuse
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