OKP

OKP: CIMB maintain BUY rating with $0.85 TP, pegged at 10x CY11 earnings, below the mid-cycle valuation, and discount to bigger peers who re-rated upon awards of overseas contracts. Like OKP for its high projects visibility in the public sector, and its strong potential overseas expansion story…

Note that grp is a prime candidate to government infrastructural spending and the stock offers excellent value trading at 7.4x CY11 P/E against its 3-year core earnings CAGR forecast of 28.9%....

Keep consensus estimates unchanged, which captures OKP’s higher order book and margin recovery. Note that earningse stimates have not factored in the potential catalyst of the possible overseas projects. Sustainable earnings growth will be driven by fresh order wins, particularly opportunities arising from Downtown Lines awards….

Expect immediate re-rating catalysts likely tocome from stronger than expected order momentum, strong margins from recently awarded road-raising works that will bring the group to another record profits and higher dividend payout.