HSS Could See Stronger Quarter Driven By Baghdad Project
HSS Could See Stronger Quarter Driven By Baghdad Project
So far, HSS and its JV partner have billed the client 10% for the first milestone payment (to be recognised in 3Q24F) and a further 15% will be billed by 4Q24F. This contract is important for HSS as it contributes 35% of its total orderbook of RM2.1bn as at Nov 24, has superior GP margins of 40% (vs. local jobs' c.30%) and enables it to diversify out of its MRT 3 PMC contract, on which there has not been clarity regarding the award of the civil portions. A positive catalyst to watch out for is the formalisation of another Iraq project by 4Q24F, i.e. the Naja-Karbala rail project worth US$5.35bn, where the house estimates the total PMC and CSS fees to be c.RM211m.
HSS Engineers's 3Q24F results are due out on 20 Nov. with CGS Investment Bank estimating the quarter to be stronger qoq and yoy in terms of net profit, driven by maiden contribution from its Baghdad metro contract (Baghdad) won in July 24. This will help compensate for the absence of meaningful contribution from its MRT 3 project management consultancy (PMC) contract.
HSS Engineers的3Q24F 業績將於11月20日公佈，CGS投資銀行估計，受7月24日贏得的巴格達地鐵合同（巴格達）的首次出資的推動，本季度的淨利潤環比和同比均將走強。這將有助於彌補其MrT 3項目管理諮詢（PMC）合同中缺乏有意義的捐款。
According to HSS, total estimated fees for the Baghdad metro are RM1.49bn, of which HSS's 50% share is RM745m. Of this amount, RM249m (0.6% of total construction cost of RM83bn) relates to the PMC work that commenced in Jul 24 and ends in 3Q25F. Thereafter, the construction supervision services (CSS) contract worth RM497m (1.2% of construction cost of RM83bn) will commence in 3Q25F and end in May 29F. The JV will receive an advance payment of RM74.5m (HSS: RM37m), 15% of the PMC work.
根據HSS的數據，巴格達地鐵的總費用估計爲14.9億令吉，其中HSS的50％份額爲74.5萬令吉。其中，24900萬令吉（佔總建築成本830億令吉的0.6％）與7月24日開始並於 3Q25F 結束的PMC工程有關。此後，價值49700萬令吉（建築成本830億令吉的1.2％）的施工監督服務（CSS）合同將在 3Q25F 中開始，並於5月29日結束。合資企業將獲得7.45萬令吉的預付款（HSS：3,700萬令吉），即PMC工作的15％。
The negative operating cashflow in 2Q24, which was due to a key client migrating to a new payment system, has been resolved and HSS should be cash flow positive in 3Q24F. Key milestone for Baghdad reached; advance payment soon. According to HSS, a positive milestone was achieved for the Baghdad metro when the JV raised the required performance bond and bank guarantees, which will be submitted to the relevant authority. Approval, which HSS expects in end-Nov 24F, will pave the way for the advance payment to be received by Dec 24F.
由於主要客戶遷移到新的支付系統而導致的 24 年第 2 季度運營現金流負已得到解決，在 3Q24F 中，HSS 的現金流應該爲正數。巴格達的關鍵里程碑已經到來；預付款即將到來。根據HSS的說法，巴格達地鐵取得了積極的里程碑，合資公司提高了所需的履約按金和銀行擔保，這些擔保將提交給有關當局。HSS預計將在11月24日底獲得批准，這將爲12月24日之前收到預付款鋪平道路。
So far, HSS and its JV partner have billed the client 10% for the first milestone payment (to be recognised in 3Q24F) and a further 15% will be billed by 4Q24F. This contract is important for HSS as it contributes 35% of its total orderbook of RM2.1bn as at Nov 24, has superior GP margins of 40% (vs. local jobs' c.30%) and enables it to diversify out of its MRT 3 PMC contract, on which there has not been clarity regarding the award of the civil portions. A positive catalyst to watch out for is the formalisation of another Iraq project by 4Q24F, i.e. the Naja-Karbala rail project worth US$5.35bn, where the house estimates the total PMC and CSS fees to be c.RM211m.
到目前爲止，HSS及其合資合作伙伴已向客戶收取了第一筆里程碑款項的10％的賬單（將在 3Q24F 中確認），另外15％的賬單將由 4Q24F 支付。該合同對HSS很重要，因爲截至11月24日，該公司貢獻了其21億令吉總訂單的35％，其GP利潤率高達40％（而當地就業的約爲30％），並使其能夠從MrT 3 PMC合同中實現多元化，該合同的民事部分的授予尚不明確。值得關注的積極催化劑是 4Q24F 正式確定了另一個伊拉克項目，即價值53.5億美元的納賈-卡爾巴拉鐵路項目，該項目估計，該項目的PMC和CSS費用總額爲21100萬加元。
Reiterate Add with an unchanged TP of RM1.48
CGS is adjusting its FY24F/FY25F/FY26F EPS by -21%/+1%/+4% to factor in lower-than expected contribution from MRT 3 PMC but compensated by faster recognition of Baghdad metro coupled with adjustment in recognition of its existing orderbook.
重申添加，目標價不變，爲1.48令吉
CGS正在將其24財年/25財年/26財年的每股收益調整爲-21％/+1％/+4％，以考慮MrT 3 PMC的貢獻低於預期，但對巴格達地鐵的認可速度加快，以及爲確認其現有訂單而進行的調整來彌補。
The blended GP margin assumptions for FY24F/FY25F/FY26F are 31%/28%/28%, which are deem conservative as GP margins for the past 10 quarters were 30-37%. CGS reiterates its Add rating for its capex-light business model and its positioning at the front of the construction value chain with an unchanged DCF-based TP of RM1.48 (WACC: 9.6%, TG: 4.5%, Rf 4%, COE of 11%). Rerating catalysts include receipt of the advance payment for its Baghdad metro contract and faster awards of MRT 3 and other projects while delays in these processes and foreign country risk present downside risks.
24財年/25財年/26財年的混合GP利潤率假設爲31％/28％/28％，這被認爲是保守的，因爲過去10個季度的GP利潤率爲30-37％。CGS重申其輕資本支出商業模式的Add評級及其在建築業價值鏈的最前沿，基於DCF的目標不變，爲1.48令吉（WACC：9.6％，TG：4.5％，Rf 4％，Rf 4％， 代碼 爲 11%）。重新評級催化劑包括收到巴格達地鐵合同的預付款，以及更快地授予MrT 3和其他項目，而這些流程的延誤和外國風險則存在下行風險。
譯文內容由第三人軟體翻譯。
