Kenanga Research has made an “outperform” recommendation to Pestech International Bhd. It said that it continues to like this niche utility infrastructure play which could potentially benefit from the revival of mega projects domestically and the fast-growing energy infrastructure development market in Indochina.
It said that as such, it continues to rate the stock an OUTPERFORM with an unchanged target price of RM1.11 which is based on a 3-year moving mean of 14x FY22E PER.
IPestech has won its biggest-ever contract with a value of RM743million for the KLIA aerotrain project which comes with financing, and O&M services.
Kenanga said that this is a highly positive win being its first airport train system project which will act as a good reference for future tender regionally.
Yesterday, PESTECH’s wholly owned-subsidiary Pestech Technology Sdn Bhd finally secured the long-awaited EPCC contract for KLIA’s automated people mover aerotrain project, to replace the aging aerotrain system, from Malaysia Airports (Sepang) Sdn Bhd at a contract value of RM743.0m.
The contract, which is option 2 under the tender, is inclusive of financing plus a 10-year O&M contract and this also explains why the contract value is higher than what the market was speculating at RM400m previously.
