SINGAPORE (May 23): CGS-CIMB Research is maintaining its “add” call on Yongnam Holdings with an unchanged target price of 33 cents, which is pegged to 0.7 times FY19F P/BV based on a 20% discount to the long-term average of 0.9 times.

To recap, Yongnam recently announced it had secured contracts worth $120.8 million for infrastructure works in Singapore, Hong Kong and India.

This bring the group’s orderbook to $448 million, the highest in seven years.

In a report last Thursday, analyst Colin Tan says the latest development boosts Yongnam’s outlook for a potential turnaround in FY20F.

He also highlights how the group is also currently in the midst of pursuing other infrastructures such as for the construction of the Jurong-Region Line stations as part of a joint venture with South Korea’s Daewoo.

“We believe [Yongnam] is tracking our expectations of $330 million order wins for FY19F. Majority of the latest contract wins will commence in 2HCY19 with completion in 12-36 months’ time,” notes Tan.

At the current share price of 17 cents, the stock is trading at 0.4 times FY19F B/V, which is 1 s.d. below its ten-year average of 0.9 times.

“Key re-rating catalysts include stronger-than-expected order wins in FY19F… Downside risks include prolonged project delays that could deter a quick profit turnaround,” concludes the analyst.

Shares in Yongnam last traded 0.6% lower at 17 cents before the midday trading break.