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Monday, April 14, 2014

Ahmad Zaki - Sowing The Seeds For Growth (OSK)

Maintain  BUY.  Ahmad  Zaki  is  a  good  small-cap  proxy  to  public infrastructure  spending  given  its  involvement  in  the  construction  of  the Klang  Valley  MRT  project  and  various  government  facilities.  Its  current outstanding  construction  orderbook  of  MYR1.9bn  (that  can  already  last for  2-3  years)  will  surge  by  80%  to  MYR3.5bn  when  the  MYR1.55bn EKVE hits the ground over the immediate term. We also like Ahmad Zaki for  its  stable  of  concession  assets  comprising  a  highly  profitable bunkering  operation  at  the  Kemaman  Supply  Base  in  Terengganu,  the IIUM  Teaching-Hospital  under  construction  (26%  completed)  and  the EKVE  under  planning.  In  addition,  there  is  tremendous  value  in  its 21,000-ha  oil  palm  plantations  (23%  planted)  in  West  Kalimantan, Indonesia.  Our  FV  is  rationalised  down  by  28%  to  MYR0.96  (from MYR1.33) based on SOP valuation.

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