STANDARD & Poor's Equity Research (S&P) upgraded Fajarbaru Builder Group (FBG) (7041) to a "buy" from "hold", citing the builder as a strong contender to win jobs in the upgrading of the low-cost carrier terminal (LCCT).
"We expect FBG's bid for parts of the new LCCT project, including the terminal building (third package) and on-going tenders for about RM300 million worth of local jobs, to provide potential earnings upside," it said in a report on February 10.
It believes FBG is a strong contender for the new LCCT given the group's involvement in the upgrade and extension works for the existing LCCT.
Despite the promising prospects, it lowered its 12-month target price for the group to RM1.30 from RM1.40 before, given its recent share price weakness. It closed at RM1.13 yesterday.
The stock is now trading on a projected price-earnings ratio of 8.2 times for the current fiscal year and 6.7 times for the next year, which in S&P's view is undemanding.
It believes FBG's "decent" dividend yield of 5.6 per cent in the current year should provide support to its share price.
The group's outstanding orderbook of RM370 million is expected to last it until 2012. Its healthy balance sheet of RM134.7 million net cash as at end-2009 will place it in a good position to secure larger projects and diversify into property development, S&P said.
