Companies REPORT: HSL *********************************** Despite experiencing lower-than-expected figures for the third quarter, analysts believe Hock Seng Lee Bhd (HSL) will pick up ahead of the implementation of the Goods and Services Tax (GST). Yesterday, the stock dropped five sen or 2.56 per cent to RM1.90per share. MIDF Amanah Investment Bank Bhd’s research division (MIDF Research) said it is noteworthy that its 3Q financial year 2014 (3QFY14) revenue and net profit improved significantly to RM155.4 million. “We note that the group’s 9MFY13 net profit lagged expectations mainly due to lower revenue contribution from its property development segment. We opine the decline was attributable to slower property billings. “Nonetheless, despite of the shortfall, the segment’s profit before tax (PBT) margin remained healthy at above 30 per cent. “We expect its property development activities to pick-up pace in the coming quarters ahead of the implementation of GST,” it said. The firm also observed that certain HSL projects – such as infrastructure works project at Demak Laut Industrial Park in Kuching and a raw water pumping station at Tanjung Manis water supply project secured in 2H13 – were now progressing at a faster pace, moving beyond the initial execution stage. “We anticipate earnings contribution from its property development segment to improve further moving forward.” RHB Research Institute Sdn Bhd (RHB Research) added to this sentiment, adding, “We believe HSL’s long wait for Phase 2 of the Kuching Centralised Sewerage System project (worth about RM800 million based on RHB estimate) will be over in FY15. “We understand from sources that the contract award will happen ‘soon’.” Given its dominant position in Sarawak’s construction sector, HSL is also well positioned to garner a slice of the action in the RM27 billion Pan-Borneo Highway. At present, its outstanding construction orderbook stands at RM1.1 billion, which will keep it busy for the next two years noted RHB Research.
Posted on: Tue, 02 Dec 2014 04:13:13 +0000
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