KUALA LUMPUR: HLIB Research has a buy call on Protasco Bhd with a target price of RM1.20.
The company, said the research house, is seen as a potential general election beneficiary as spending on road maintenance increases in the run up to the polls.
Additionally, HLIB Research noted that Protasco holds two concessions to maintain Federal roads in the states of Selangor, Pahang, Kelantan, and Terengganu as well as in Sarawak (covering Sibu, Bintulu, and Mukah).
It also pointed out that Protasco has a maintenance order book of RM4.4 billion which provides the company with a stable earnings base for the next 10 years.
"We like Protasco for the defensive qualities of its maintenance business which places a floor to downside risk via decent dividend payments," HLIB Research said.
"We view Protasco as an election beneficiary as spending on road maintenance increases running up to the polls, which must be held by August 2018. To expand its recurring income base, Protasco is targeting the maintenance of government buildings," it added.