SINGAPORE (Feb 2): Yongnam on Thursday announced that it has kickstarted 2018 with four contract wins for projects in Singapore that are worth a total of $22.9 million.
One of the contracts involves supplying and erecting structural steelworks for a basement development within the upcoming Health City Novena and is expected to complete in early 2019.
The other three contracts comprise demolition work for Bright Hill Station (Thomson East Coast Line) and steelwork for both Keppel and Cantonment Stations (Circle Line 6) for completion in 2018 and 2023.
See: Yongnam kickstarts 2018 with $23 mil in contracts
As such, CIMB is maintaining its “add” call on the group with a target price of $53 cents.
In a Thursday report, analyst Colin Tan says, “We believe these order wins attests to Yongnam’s capability and reputation in the civil engineering space and represent a start to a potential flow of order wins that could come in 2018 19 as construction activity for several major public infrastructure projects is expected to rise this year.”
According to the group’s management, steel and strutting works for Kim Chuan Depot Extension and the Melbourne Metro Tunnel project are still on the cards.
The management is confident that a positive outcome from these potential projects could be reached in the first quarter this year, despite the talks taking longer than initially expected.
With the upcoming North-South Corridor project set to provide over $500 million worth of strut work, the analyst expects the group to clinch at least 50% of the work as a sub-contractor.
In addition, the group may see other overseas projects potentially in the pipeline. These include Kai Tak Central and Tuen Mun Expressway in Hong Kong as well as West Gate Tunnel in Victoria, Australia.
These projects will require struts for underground and tunnelling works for which Yongnam is gunning for this year.
“Yongnam to continue winning more orders this year with major public infrastructure projects such as Circle Line 6 and North South Corridor Corridor in the works. We expect an order book of S$500 to be achieved by end FY18,” says Tan.
As at 11.35am, shares in Yongnam are trading at 34 cents or 17.59 times FY18 core earnings.
