not vested
Trading Buy: HSL - 6238
A strong proxy to Sarawak's growth
(Last price: RM1.33, Potential upside +16.5%)
Company Profile
HSL is primarily involved in construction within the state of Sarawak.
Trading Catalyst
In anticipation of higher project flows in Sarawak prior to the next state elections (must be held before Sep 2021), HSL is deemed as a major beneficiary of Sarawak’s robust infrastructure spending, as evident by its decent YTD new job wins of RM481m (FY18: RM142m).
HSL is eyeing further contracts in the state as funding could be available from Sarawak’s solid state reserves (c.RM31bn). Valuations are not pricey at 10x FY20 P/E and 0.93 P/B, supported by its outstanding order book of ~RM2.5b (3 years visibility).
Technically, the stock is ripe for a rebound towards RM1.39-1.55 zones, pending a decisive breakout above downtrend line at RM1.35.
Technical View
Resistance: RM1.39 / RM1.45 / RM1.55
Support: RM1.30 / RM1.29
Cut loss: RM1.26
Key Financial Stats
Trading at 10x FY20E (33% below 5Y mean of 15x) and 0.93x P/B
Source: Bloomberg, HLIB