Teo Seng Capital Bhd – 6th Oct 20

We note that new contracts flow remain absent in 3QFY20, implying tapering of construction orderbook. On a brighter note, the maintenance segment is expected to provide some alleviation to the weakness across other segments, backed by an outstanding orderbook to approximately RM3.70bn that ensure recurring stream of income till 2029. We expect Protasco to tap into the RM1.30bn allocation for construction and upgrading of rural roads for 920km under Budget 2021.

As of 1QFY21, Econpile’s is equipped with an unbilled construction orderbook of approximately RM680.0m from 25 on-going projects. Moving forward, the group’s unbilled orderbook-to-cover ratio at 1.4x against FY20 revenue of RM403.0m will provide earnings visibility over the next two years.

We attended the post quarter results analyst briefing and came away feeling re-assured on OCK Group Bhd (OCK) expansion moving into FY21f. 9MFY20 was largely affected by the slowdown of sites deployment due to the Covid-19 pandemic. Moving into the final quarter of FY20, we understand that the 4Q results are traditionally stronger over the years may see an exception in FY20 due to the current implementation of Conditional Movement Control Order (CMCO) that is impacting the engineering services segment via restriction of interstate travel.