InvestIdeas

not vested

VINCENT KHOO
Head of research for UOB Kay HianStock pick: Ekovest Bhd

EKOVEST Bhd is a deeply undervalued contractor, concessionaire and property developer.

Its key highlight for the year was the disposal of a 40% equity stake in Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd, the holding company of the highly coveted Duta-Ulu Kelang Expressway (Duke one and two) to the Employees Provident Fund (EPF) for RM1.13bil.

The price tag paid by the EPF implicitly values 100% of Duke one and two at RM2.82bil, significantly above Ekovest’s market capitalisation of RM2bil.

The sale is expected to be completed by the first quarter of 2017, and would see shareholders being rewarded with a bumper 25 sen a share in special dividends, implying a 11% yield.

In addition, the group’s construction division is also armed with an all-time high outstanding order book of RM4.7bil (implying a superior order book cover of 7.6 times compared to its financial year 2016 construction revenue).

A bulk of the order book is from its third highway concession, the 50km Setiawangsa-Pantai Expressway, which is expected to be open to traffic in 2020.

Earnings-wise, we expect the company to deliver a conservative three-year earnings compounded average growth rate of 69%, driven by its construction and property division, as well as narrowing losses for Duke one and two.

The stock is trading at an undemanding FY18 price-earnings ratio valuation of 12.4 times, 30%-40% below the trading range of larger construction companies.

Currently, we have a “buy” recommendation with a target price of RM3.13 based on a 40% discount to its RM5.22 sum-of-the-parts value per share.

Source: The Star

http://www.thestar.com.my/business/busi ... gers-pick/

Ekovest joins Pan Borneo Highway project, JV work package worth RM2.1bil

BY M. HAFIDZ MAHPAR

KUALA LUMPUR: Ekovest Bhd will participate in the construction of the Pan Borneo Highway by entering into a joint venture (JV) with Miri-based Samling Resources Sdn Bhd to develop a 95.4km Sarawak stretch under a RM2.11bil contract.

In a filing with Bursa Malaysia, the Kuala Lumpur-based construction firm said its unit Ekovest Construction Sdn Bhd inked a joint venture and shareholders agreement with Samling Resources, to jointly develop and upgrade the stretch from Semantan to Sg Moyan Bridge plus Kuching-Serian roundabout interchanges.

The stretch was reported to be the longest of the 11 stretches for the Sarawak portion of the toll-free highway under phase one. The work package was one of two Pan Borneo Highway packages clinched by Samling Resources last year.

Ekovest said a JV company, Samling – Ekovest JV Sdn Bhd, would be incorporated as the vehicle for the parties to undertake the implementation of the project.

Ekovest Construction will hold a 30% stake in the JV company while Samling Resources will own the rest. Based on this, Ekovest’s share of the contract value is RM633.8mil.

To give the size of the latest contract some perspective, Ekovest's total revenue for the last financial year ended June 30, 2016, was RM793.6mil.

According to Ekovest, the JV agreement represents an opportunity of both parties to co-operate and leverage on the strength and expertise of each other.

“Ekovest Construction has the experience, expertise and track record in providing technical expertise and procurement of construction materials and equipment to undertake the project whilst Samling Resources has the experience and expertise in providing management in liaison with sub-contractors and the state government in East Malaysia,” the company said.

Ekovest shares slid 1 sen to close at RM2.40 on Friday, with 1.46 million shares changing hands.

Source: The Star

http://www.thestar.com.my/business/busi ... th-rm2bil/

not vested

Nov 9, 2016

Ekovest (EKO MK)
Rewards Fit For A Duke

Ekovest entered into a sale-and-purchase agreement to sell a 40% stake in DUKE 1 & 2 to the EPF for RM1.13b.

The company has set aside 21.6% of the sale proceeds amounting to RM244.4m (or up to 28.57 sen/share) as special dividends, implying a lucrative yield of over 12.7%. The special dividend is expected to be paid in 1Q17.

The group also announced a 2-for-5 share split to further enhance the stock’s trading liquidity.

Maintain BUY. Target price: RM3.00.

Source: UOBKH

https://research.uobkayhian.com/content ... dcf3dd8fcf

not vested

Ekovest to construct RM6.32b KL road links

BY JOSEPH CHIN

KUALA LUMPUR: Ekovest Bhd's subsidiary will undertake the construction of 72.5km of roads in Kuala Lumpur which will link with the various expressways.

It said on Tuesday Lebuhraya DUKE Fasa 2A had received a letter from the government on the principle approval of the proposed privatisation of the Kampung Baru Link, Istana Link and Kapar Link Expressway.

“With a total length of approximately 75.2km, the proposed project is expected to provide vital connectivity and direct linkage for movement in and around Kuala Lumpur City Center and completes the missing link for seamless travelling in and out of Greater Kuala Lumpur and Klang Valley,” the infrastructure company said.

Ekovest said the estimated total project cost of RM6.32bil (excluding Goods & Services Tax) for the proposed project was expected to be financed via a combination of internally generated funds, borrowings and/or other fund raising exercise.

It said the proposed project was subject to further terms and conditions to be negotiated between the Government and LDF2A.

“The principle approval by the government shall not in any way be considered as binding upon the government until the execution of the relevant agreement between the government and LDF2A,” it said.

Source: The Star

http://www.thestar.com.my/business/busi ... oad-links/

Ekovest (EKO MK)

Another Big Win

Ekovest broke another milestone yesterday after securing its third highway concession, the DUKE2A.

The new urban expressway would complement the existing DUKE 1 & 2 highways, as well as the upcoming Setiawangsa-Pantai
Expressway.

Ekovest’s near- to medium-term construction earnings outlook is further enhanced, with construction orderbook set to easily
surpass RM10b in the next 18-24 months.

Maintain BUY and target price of RM3.13.

Source: UOBKH

https://research.uobkayhian.com/content ... 80ef9e0d1b

not vested

Ekovest’s order book to hit RM13bil with extension job

BY DANIEL KHOO

Lim: ‘I think this is the missing link in the network of roads in the Klang Valley as it will link key highways.’

This will keep the company busy for the next five years

KUALA LUMPUR: Construction work to extend the Duta-Ulu Kelang Expressway (Duke) will boost Ekovest Bhd’s order book to RM13bil, according to its managing director Datuk Seri Lim Keng Cheng.

“The RM13bil construction order book will keep us busy for the next five years,” Lim told a press conference after an EGM yesterday.

The extension work, known as Lebuhraya Duke Fasa 2A (Duke2A) project, was clinched by the company earlier this week.

Ekovest, through its subsidiary, would undertake the construction of 75.2km of roads here, which would link the various expressways at a total cost of RM6.32bil.

“I think this is the missing link in the network of roads in the Klang Valley as it will link key highways. This will be built instead of City Hall’s local council road.

“The Duke highway is basically a connector and since Kuala Lumpur has 13 highways, we will connect them all,” Lim said.

Ekovest has received a letter from the Government on the principle approval of the proposed privatisation of the Kampung Baru link, Istana link and Kapar link expressway.

“It will be financed through a consortium of banks.

“The extension of the entire highway including Duke2A will be completed by 2030,” Lim said.

At the EGM, shareholders unanimously approved the 40% stake disposal in phases one and two of the Duke highway to the Employees Provident Fund (EPF) for RM1.13bil. Lim said the disposal to the EPF was part of its strategy to strengthen its balance sheet to take on more projects such as the Duke2A.

The company’s net gearing ratio is expected to be lowered to 0.38 times after the exercise is completed.

“This is the main reason we are divesting the 40% to the EPF so that we will have enough funds for this new project,” he added.

Asked if the company would require more investors to fund the project, he said that the matter had not been determined.

On whether margins would be impacted by the rising construction cost, he said that 35% of the cost had already sunken due to the usage of fabricated moulds that had already been prepared earlier.

“For our highway, we have the mounds for the beams and pillars. We will still be using the same set of equipment for Duke2A. We will overcome the increase in the prices of steel bars and I also foresee that we will have slightly higher margins,” Lim said.

Commenting on its River of Life project, Lim said the company had secured two more contracts and hoped that it would obtain another deal soon.

On its property segment, the company planned to launch the remainder two blocks of Eko Titiwangsa in the middle of this year and Eko Cheras is expected to be completed by the year-end.

Source: The Star

http://www.thestar.com.my/business/busi ... nsion-job/

not vested

Ekovest to pay 25 sen special dividend post DUKE stake sale

By Chester Tay

KUALA LUMPUR: Ekovest Bhd, which has completed the sale of a 40% stake in the Duta-Ulu Kelang Expressway (DUKE) concession to the Employees Provident Fund (EPF), will be paying a 25 sen special dividend to shareholders.

In a filing with Bursa Malaysia yesterday, Ekovest said its shares will trade ex-dividend on Feb 23, with the payout slated for March 8.

Ekovest previously said it was disposing of a 40% equity interest held in Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd (Kesturi) to the EPF for RM1.13 billion.

Kesturi is the concessionaire of DUKE, a 34km highway comprising two phases, with a concession period of 54 years. It was previously an indirect wholly-owned unit of Ekovest. Upon completion of the stake sale, Ekovest is left with a 60% stake in Kesturi.

Ekovest said the remainder of the disposal proceeds will be used for repayment of borrowings, exit payment, working capital and expenses for the corporate exercise.

In a separate announcement yesterday, Ekovest also updated that its share split, which involves the subdivision of every two existing shares into five, will also go ex on Feb 23.

Source: The Edge

not vested

Feb 27, 2017

Ekovest (EKO MK)
2QFY17: Shining Bright

Results came in above expectations with 2QFY17 net profit surging 7.8x yoy to RM41m in 2QFY17, driven by a strong construction division.

1HFY17 net profit of RM81m represents 78.7% of our forecast, prompting us to raise our FY17-19 net profit estimates by 57%, 18/% and 13%.

We also lift our SOTP target price to RM1.41 (from RM1.15), implying 18.6x fully diluted FY18F PE , which we deem fair as the bulk of the assets (DUKE1 & 2) could be monetised via an IPO.

Maintain BUY.

Source: UOBKH

https://research.uobkayhian.com/content ... 4241415c3f

Ekovest set to clinch the Blue River Project
BY M. HAFIDZ MAHPAR

The beautification phase of Precinct 7 in the River of Life project covers important landmarks such as Masjid Jamek (pic), Leboh Pasar Besar and Central Market.

KUALA LUMPUR: Kuala Lumpur City Hall (DBKL) seeks to appoint Ekovest Bhd’s unit EkoRiver Construction Sdn Bhd (ERCSB) as the design and build contractor for the proposed “Blue River Project” in the vicinity of the River of Life Precinct 7 – Masjid Jamek Kuala Lumpur zone.

In a filing with Bursa Malaysia, the construction and property development firm said ERCSB received DBKL’s letter of intent on the matter on Tuesday.

Ekovest estimated the project’s total contract value at RM79mil, excluding goods and services tax.

“The project is subject to finalisation of its price, specification and terms to be negotiated between DBKL and ERCSB,” it said.

Ekovest said it would make an announcement to the stock exchange as and when there was a material development in relation to the project.

Ekovest Bhd has a 60% stake in the joint-venture company that was appointed in 2011 as the project delivery partner for the River of Life project by the Government. Malaysian Resources Corp Bhd (MRCB) holds the remaining 40%.

Source: The Star

http://www.thestar.com.my/business/busi ... r-project/

not vested

Ekovest plans to boost size of EkoQuay development in KL

BY M. HAFIDZ MAHPAR

KUALA LUMPUR: Ekovest Bhd plans to undertake a mixed development project with a gross development cost of RM293.8mil in Setapak, Kuala Lumpur, by combining its existing 1.59-acre land bank with adjoining land measuring 1.16 acres.

The construction and property development firm announced to Bursa Malaysia yesterday that its unit Ekovest Properties Sdn Bhd had sealed an agreement to buy the two adjoining parcels of land from Ekovest’s substantial shareholder, Lim Seong Hai Holdings Sdn Bhd (LSHHSB), for RM26.77mil.

The purchase is a related party transaction, as Ekovest managing director Datuk Seri Lim Keng Cheng is a major shareholder and director of LSHHSB, which in turn owns 9.48% equity interest in Ekovest.

The two parcels of land are situated in Section 85, on the western side of Jalan Pahang, Kuala Lumpur.

Ekovest said the proposed mixed development project, called EkoQuay, consisted of serviced apartments and retail/commercial blocks.

It was previously reported that EkoQuay would be a component of the KL River City project, which also includes EkoGateway, EkoTitiwangsa and EkoRiver.

The company estimated to make a profit of RM103.3mil from the project, which is expected to start next year and be completed within four years.

The development order for the project was approved by Kuala Lumpur City Hall in February 2016. However, it said, an amended development order had been submitted in October with an increased plot ratio and the integration of new land.

Ekovest said the acquisition would be financed via internally generated funds and borrowings in the proportion of 30%:70%.

Source: The Star

http://www.thestar.com.my/business/busi ... -rm294mil/