KE: CSC Holdings TP $0.53, S$120m contracts won over past 2 months

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CSC Holdings - S$120m worth of contracts won over past 2 months.

CSC announced that it has clinched a total of S$120m worth of foundation and geotechnical engineering contracts from both the public and private sectors over the past two months. Some of the more notable projects include foundation works for Collyer Quay commercial development, Reflections at Keppel Bay, Downtown Line extension, Fusionpolis, etc.

With this latest round of contract wins, CSC’s orderbook has swelled to S$330m; these will be delivered over the next 12 months.

As one of the largest player in Singapore specializing in foundation and geotechnical engineering works, the company is poised to benefit from the construction industry upturn in Singapore amid a tight supply situation, translating to pricing power and healthy margins. To alleviate the capacity strains in the industry, the government recently pushed back some public sector infrastructural projects.

We believe the company will continue to exhibit strong earnings growth on the back of acquisitive and organic growth. The stock is trading at undemanding 9x P/E (FY3/0 and 8x P/E (FY3/09).

Assuming it trades up to peer average of 12x, fair value target is S$0.53/share. In our view, consensus estimate has not priced in the group’s buoyant prospects.