Maintain outperform with an unchanged target price (TP) of RM1.75: Pestech International Bhd has secured its third contract in the Philippines for an engineering, procurement, construction and commissioning (EPCC) contract worth about RM94 million. We see vast potential there as 30% or 28 million of the population of the Philippines do not have access to electricity supply. Meanwhile, with the revival of mega transportation infrastructure projects in Malaysia, contract awards should start rolling soon. Given its technical capability, Pestech is likely to stand a good winning chance.
Last Thursday, Pestech announced that its wholly-owned subsidiary Pestech Sdn Bhd had received a notice of award from National Grid Corp of the Philippines (NGCP) for the EPCC contract for Cebu-Bohol 230kV interconnection project for the substation portion for a total contract value of about RM94 million, comprising an offshore portion of US$13.89 million (RM57.7 million), and onshore portion of 439.9 million peso (RM36.1 million). Under the contract, Pestech will deliver a new 230kV outdoor substation in Bohol and a 138kV extension work at the existing substation in Bohol with a project duration of 450 days.