Engtex Poised for Growing Orderbook
Engtex Poised for Growing Orderbook
WE CAME away from a recent engagement with Engtex Group Bhd feeling upbeat on its prospects.
在最近與Engtex Group Bhd的合作之後，我們對其前景感到樂觀。
More orders. As panel water pipe suppliers of Pengurusan Aset Air Bhd (PAAB), Ranhill SAJ Sdn Bhd and Pengurusan Air Selangor Sdn Bhd (PAS), Engtex is poised for more orders ahead. This follows the recent announcement by National Water Services Commission (SPAN) of an average hike of 25 sen/cu m or ~42% hike in water tariffs effective Feb 1, 2024, for domestic users.
更多訂單。作爲Pengurusan Aset Air Bhd（PAAB）、Ranhill SAJ Sdn Bhd和Pengurusan Air Sdn Bhd（PAS）的面板水管供應商，Engtex有望在未來獲得更多訂單。在此之前，國家水務委員會（SPAN）最近宣佈，自2024年2月1日起，家庭用戶的水費平均上調25仙/立方米，漲幅約42％。
The hike will translate to strengthened cashflows for these water operators, allowing them to kickstart their capital expenditure (capex) programmes in water infrastructure including non-revenue water (NRW) reduction initiatives. Recall, the government targets to reduce the national NRW from 36% in 2021 to 15% by 2049. Also recall, it is estimated that 70%-75% of the current NRW is attributed to issues such as leaks, pipe bursts and damaged fittings.
此次上調將轉化爲這些水務運營商的現金流增加，使他們能夠啓動水基礎設施方面的資本支出（capex）計劃，包括無收益水（NRW）削減計劃。回想一下，政府的目標是將全國北威州人口從2021年的36％減少到2049年的15％。另外回想一下，據估計，當前北威州70％-75％是由於泄漏、管道爆裂和配件損壞等問題造成的。
Orderbook. Engtex revealed that as at November 2023, its orderbook stood at RM229 million (ductile iron [DI] pipes: RM30 million, mild steel [MS]/pilling pipes: RM199 million), while its tenderbook was at RM720 million (DI pipes: RM63 million, MS/pilling pipes: RM657 million). Meanwhile, it believes steel prices have bottomed out and should at least stabilise at current levels.
訂單簿。Engtex透露，截至2023年11月，其訂單量爲 RM229 百萬令吉（球墨鑄鐵 [DI] 管道：3000萬令吉，低碳鋼 [MS] /起球管：RM199 百萬令吉），而其招標金額爲 RM720 百萬根（DI 管道：6,300萬令吉，MS/起球管：RM657 百萬令吉）。同時，它認爲鋼鐵價格已經觸底，至少應該穩定在目前的水平。
Asset divestment. We understand that there are plans to divest its non-core assets. The proceeds could significantly reduce its current net debt and gearing of RM495 million and 0.62x as at end of the third quarter of 2023 (3Q23), respectively, and hence lower its finance costs.
資產撤資。據我們了解，有計劃剝離其非核心資產。這些收益可能會大幅減少其截至2023年第三季度末（3Q23）的當前淨負債和資產負債總額分別爲 RM495 百萬和0.62倍，從而降低其財務成本。
Forecasts. We maintain our financial year 2023 (FY23F) earnings forecast but lift our FY24F earnings by 69% to reflect strong pipe orders and overall margins.
預測。我們維持了2023財年（FY23F）的收益預測，但將我們的 FY24F 收益提高了69％，以反映強勁的管道訂單和整體利潤率。
Valuations. Consequently, we raise our target price (TP) by 83% to RM1.41 as we recalibrate our price-to-book value (PBV) valuation basis to 0.8x (from 0.4x previously) to reflect sector valuation during the last upcycle in the water in 2014 triggered by the massive RM1 billion Langat 2 water treatment plant with a capacity of 1,130 million litres per day (MLD) following the completion of the Pahang-Selangor Raw Water Transfer project. There is no adjustment to our TP based on environmental, social and governance (ESG) given a three-star rating as appraised by us.
估值。因此，我們將目標價格（TP）提高了83％至1.41令吉，因爲我們將賬面市值估值基礎調整爲0.8倍（從之前的0.4倍），以反映彭亨河完工後10億令吉的大型Langat 2水處理廠引發的2014年最後一個水上升週期的行業估值，該水處理廠的產能爲每天11.3億升（MLD）。雪蘭莪原水輸送項目。根據我們評估的三星評級，我們不會根據環境、社會和治理（ESG）對我們的目標進行調整。
Investment case. We continue to like Engtex for: (i) The huge potential in the water pipe replacement market locally, (ii) its dominant market position in both large- diameter MS pipes and DI pipes, and (iii) its strong earnings visibility underpinned by significant order backlogs and a strong pipeline of new projects. Maintain 'Outperform'.
投資案例。我們仍然喜歡Engtex，因爲：（i）當地水管替代市場的巨大潛力，（ii）其在大直徑MS管道和DI管道中的主導市場地位，（iii）其強勁的盈利知名度得到了大量訂單積壓和大量新項目的支持。保持 “跑贏大盤”。
Risks to our call include: (i) Volatility in input costs and end-product selling prices, and (ii) delay in the rollout of water infrastructure projects.
我們呼籲的風險包括：（i）投入成本和最終產品銷售價格的波動，以及（ii）水利基礎設施項目的推遲推出。
譯文內容由第三人軟體翻譯。