It’s a ‘buy’ for HSS Engineers

PETALING JAYA: Inter-Pacific Research Sdn Bhd has placed a fair value with subscribe recommendation and a target price of 62 sen on HSS Engineering Bhd (HEB) whose shares are to be listed on the ACE Market of Bursa Malaysia for 50 sen per share on Aug 10.
In a report yesterday, Inter-Pacific said the target price is based on 16 times price-earnings ratio pegged to the group’s estimated financial year 2016 (FY16) earnings per share of 3.89 sen.
“We benchmark valuations at levels observed for the Bursa Malaysia Construction Index,” Inter-Pacific said, noting the group has no dividend policy but features a healthy financial position.
Inter-Pacific said it expects HEB to undertake an exercise for a transfer to the Main Market of Bursa Malaysia in the near future after the market warms up and understands its business model which is new to the stock exchange.
The research house said the group is eligible to be listed in the Main Market as it meets the minimum profit requirement, where it attained more than an aggregate of RM20 million for three years and at least RM6 million for the most recent financial years.
In addition, Inter-Pacific said the group, which is involved in major local projects, is riding on the construction sector growth that is expected to grow 7.9% this year, while engineering and project management services is expected to grow 6.5%.
Meanwhile, the research firm said, HEB is looking for opportunities to grow internationally.