As YTD job wins are still within our expectations, we leave our estimates unchanged. Nonetheless we do highlight that a potential provision for Bakun would be the key risk to our estimates. Management continues to guide that no provisions for Bakun will be made.
For a further discussion on this issue, please refer to our construction sector report dated 10 March entitled “Any More Kitchen Sinking?”. Despite this risk, our BUY rating on AZRB is maintained given AZRB’s undemanding valuations at 6.6x FY11 earnings and 5.8x FY12. Our RM1.29 TP is based on 10x FY11 earnings which represents the low end of our PER target for small cap contractors within our coverage.
For a further discussion on this issue, please refer to our construction sector report dated 10 March entitled “Any More Kitchen Sinking?”. Despite this risk, our BUY rating on AZRB is maintained given AZRB’s undemanding valuations at 6.6x FY11 earnings and 5.8x FY12. Our RM1.29 TP is based on 10x FY11 earnings which represents the low end of our PER target for small cap contractors within our coverage.
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