Nov 22, 2009

Salcon Bhd

SALCON Bhd is drawing the interest of some investors because of its ability to clinch a series of significant deals lately.

Already boasting a sizeable orderbook, the water infrastructure builder and concessionaire is seen to be able to generate a stream of sustainable and possibly growing stream of earnings from its exposure to the booming water and water-related businesses in Malaysia and also abroad. This could be the main reason that justifies the holding of the penny stock. As at its financial year (FY) ended December 2008, Salcon’s orderbook stood at RM1.1bil.

Last week, Salcon won a RM35.8mil contract for the remedial works for a vacuum sewerage system in Sepang, Selangor, via its indirect 60%-owned subsidiary Envitech Sdn Bhd. That was the second contract win for the company in FY2009 after it secured the RM94.3mil sewage treatment plant project for Medini Development in Iskandar Malaysia in May.

Although there are only about five weeks left before the year ends, Salcon believes that the Sepang project would still be able to contribute positively to its FY2009 earnings. Positive earnings from the Sepang project are expected up to its FY2011.

Some analysts argue that Salcon’s share price is generally undervalued, as it does not reflect the company’s potential earnings-generative assets and strong net cash position of RM34.7mil. For three months to June 2009, Salcon’s revenue and net profit stood at RM111.6mil and RM7.2mil, respectively, compared with its revenue and net profit of RM61.9mil and RM4.1mil in the same period last year.

The comments above do not represent a recommendation to buy or sell.

SALCON :  [Stock Watch]  [News]

Source: thestar

Saturday November 21, 2009
Eye on stock