The company will be pursuing more water-related infrastructure contracts in FY22 which could provide more job flow
By SHAFIQQUL ALIFF / pic by TMR FILE
TALIWORKS Corp Bhd could attract investor interest if it manages to bag water-related infrastructure contracts it has tendered for and completes the stake buy in four solar power projects by the end of first quarter of 2022 (1Q22).
CGS-CIMB Securities Sdn Bhd analyst Sharizan Rosely stated that Taliworks has guided that it will be pursuing more water infra related contracts in financial year 2022 (FY22), which could provide more job flow upside following the RM896 million worth of contract works it secured from the Sungai Rasau water supply scheme in December 2021.
He acknowledged the remaining package one tender of the Rasau project worth RM2 billion involving 700 million litres a day capacity has been delayed but Taliworks has been shortlisted along with three other candidates.
“We expect the award to be announced by mid-2022 as it is a priority project in the state of Selangor. We understand that highway traffic volumes year to date for both the Grand Saga and Grand Sepadu Highways have recovered to 91%-96% of pre-pandemic levels,” the analyst wrote in a report on Taliworks yesterday.
Sharizan added Taliworks FY21 net profit of RM78.5 million was in line with expectations and surged by 35% year-on-year (YoY), anchored by the stronger earnings performance by associate SWM Environment Sdn Bhd, lower subcontract costs and lower depreciation and the RM43.5 million toll compensation from the government (recognised in 3Q21).
The compensation was following an increase in scheduled toll rates in 2020 for its subsidiary Grand Saga Highway and this helped Taliworks mitigate the weaker performance of its water division following the expiry of Taliworks Langkawi’s water supply contract in October 2020.
Taliworks’ weaker 4Q21 revenue and core net profit quarter on quarter and YoY were reflective of toll compensation in the 3Q21. Its FY21 revenue fell 4.9% due to the prolonged Covid-19 lockdowns and weaker construction billings.
Its core net profit of RM75.6 million surged 35% YoY, driven by toll compensation, stronger associate contribution and lower tax rates, analysts stated.
Taliworks delivered on its dividend commitment of 6.6 sen a share in FY21 with its fourth interim single-tier dividend of 1.65 sen per share, consistent with its guided quarterly pay-outs.
“Our expectations and our dividend per share for financial year for FY22 to FY23 remain intact at 6.6 sen per annum supported by end of fourth quarter (4Q) cash and investment of RM457 million, in line with our expectations for FY21 total amounted to 6.6 sen,” Sharizan added.
CGS-CIMB maintained an ‘Add’ call and revalued Net Asset Value based target price of RM1.06 on Taliworks backed by attractive dividend yields of 7.3% for FY22 to FY24 forecast due to the contract wins from Sungai Rasau and other water tenders.
Downside risks include weaker earnings and further delays in the solar deal, the broker added.
Hong Leong Investment Bank Bhd (HLIB) analyst Edwin Woo maintained a ‘Buy’ call on Taliworks with an unchanged standard of procedure-driven target price of 98 sen as the engineering and concession group continues to deliver an attractive dividend yield of 7.3%.
He stated that Taliworks’ defensive source of earnings should anchor its healthy sustainable yields of 7.3% for FY22 to FY23.
“We continue to like Taliworks for its consistent earnings delivery throughout the pandemic bolstered by an attractive dividend profile with a downside risk key including lower yield spread and return of restrictions,” Woo stated in a report yesterday.
The analyst added that Taliworks’ 4Q and FY21 financial results generally met HLIB’s and consensus expectations.