Advancecon impresses in Bursa debut, announces RM30m contract win

KUALA LUMPUR: Earthworks and civil engineering company Advancecon Holdings Bhd, which has announced a RM30.1 million contract win, closed at a 34% premium to its issue price of 63 sen in its debut on Bursa Malaysia yesterday.
The counter closed at 84.5 sen on 131.6 million shares traded, making it the most actively traded stock of the day.
Advancecon aims to double the revenue of RM234 million it achieved in 2016 within five years. About 60% of the revenue was contributed by its earthworks segment, which is expected to remain as its growth propeller.
Advancecon COO Yeo An Thai said the premium attained reflects investors’ support based on the company’s past track record and validates its subscription rate.
He said the firm is “very optimistic” on its prospects, as there are many tender calls coming in for township development projects as well as in the public sector.
“We are aggressively tendering for big projects,” Yeo said, adding that its tender book value which currently stands at RM496.4 million as at May 19, could exceed RM1.5 billion at any time.
“Later, we will be participating in the East Coast Rail Link (project) … because we signed a non-disclosure agreement, we can’t disclose much,” he said.
Advancecon’s order book stands at RM572 million. This does not include the RM30.1 million sub-contract job for work package six of the Pan-Borneo Highway in Sarikei announced yesterday. The order book will keep the company busy until the end of 2019.
The company raised RM56.7 million from the IPO and will use RM29.7 million of the proceeds for capital expenditure over the next two years; RM15.1 million for the purchase of new machinery and equipment including excavators, motor graders, and tipper trucks, which will allow it to undertake larger-scale and higher-added value projects, and RM14.6 million to construct a new workshop.
Analysts had put Advancecon’s target price at 78-85 sen, emphasising their bullishness on the company based on its specialisation in earthworks and continued positive jobs flow from mega projects such as the East Coast Rail Link, Light Rail Transit 3, Kuala Lumpur-Singapore High Speed Rail and Mass Rapid Transit.