Monday, October 24, 2016

Ekovest: No Longer A Hidden Gem


Ekovest Bhd is involved in civil engineering and building works, owning of highway concessions and property development. Currently it owns 2 highway concessions, DUKE & DUKE 2 which collectively form the Duta-Ulu Kelang Expressway. The group will soon build, own & operate a third highway, the Setiawangsa-Pantai Expressway (SPE). 

In addition, Ekovest has fairly exciting prospect in property development. It has a few projects coming up, such as EkoGateway, EkoCheras and EkoTitiwangsa (which is a part of the KL River City project).

Picture: EkoGateway, EkoCheras & EkoTitiwangsa

Historical Financial Performance

Ekovest's top-line and bottom-line had been on an upswing since 2015. The increase in bottom-line was very sharp in FY2016 and it came from fair value adjustment from investment properties of RM113 million.

Chart 1: Ekovest's last 10 years' P&L

Recent Financial Result

Ekovest's quarterly result shows a group with relatively thin profit margin. In the past 10 quarters, the 4th quarters had shown bumper profits due to fair value adjustment from either investment properties or new financial liabilities (or refinancing of borrowings at lower rates).

The recent sale of a 40%-stake in DUKE and DUKE2 highway to EPF at a price of RM1.13 billion reveals just how much of the "hidden value" is in Ekovest balance sheet. The sale effectively valued Ekovest's stake in the DUKE highway at RM2.825 billion.

Table: Ekovest's last 10 quarterly P&L

Chart 2: Ekovest's last 10 quarters' P&L

Financial Position

As at 30/6/2016, Ekovest's financial position is deemed mixed, with current ratio at 1.9x and gearing ratio at 2.0x. The high gearing ratio is due to borrowings taken to finance its concession. The proceed from the sale of the 40%-stake in DUKE highway will help to reduce the gearing of the group until the start of the SPE project. It would enable the group to raise capital for the equity investment in the company undertaking the SPE project.


Ekovest was valued at RM3.00 by UOB Kay Hian in September. I believe that the valuation to be fair. (Note: Ekovest is currently trading at RM2.18.)

Technical Outlook

Ekovest broke above the line, AB which connects the peaks for the past 14 years. Its next resistance is at the horizontal line at RM2.80 or its 2000 high of RM3.00-3.10.

Chart 3: Ekovest Matrix's monthly chart as at Oct 24, 2016 (Source:


Based on exciting prospects, potential upside and bullish technical outllok, I rate Ekovest as a good Trading BUY.


I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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