MORNING CALL:3/8/23

Kenanga is liking how lean Southern Score Builders is looking

Transcript

00:00 We take a look on what is on Kenanga Researcher's radar and today it is Southern Score Builders,

00:06 formerly known as G-Neptune. Kenanga has an ad recommendation on the contractor and a

00:11 22 cent fair value. A brief KYC, the company came into being in November 2022 via the reverse

00:17 takeover of G-Neptune by privately owned Class G7 contractor Southern Score, Senebra Hard

00:24 with a profit guarantee of 80 million over 2022 to 2024. It focuses mainly on high-rise

00:30 residential building jobs in Kuala Lumpur and civil works, i.e. road and drainage works.

00:35 Meanwhile, it has a current outstanding order book of 638.5 million, 111.7 million are related

00:42 party projects, with a tender book of 634 million ringgit. This should keep it busy

00:47 for the next two to three years. It registered a strong gross margin of around

00:52 20% over FY19 to FY21. This was primarily due to its asset-light construction management

00:59 model. It is also currently exploring project viability and economic benefit of setting

01:04 up IBS manufacturing plant in Batu Caves. It already has earmarked 21.8 million of the

01:09 proceeds raised from the RTO exercise for this IBS venture. Kenanga is projecting FY23,

01:16 24 and 25 net profit of 31.4 million, 38.3 million and 42.4 million ringgit.

01:24 According to Bloomberg, Kenanga is the only research house that covers Southern Score,

01:27 so based on the 22 cent fair value, this implies a possible 10% gain from current levels.

01:33 [music]