News of the acquisition of a contract worth RM1 billion from Rolls-Royce Holdings Plc prompted analysts to change their outlook to positive on UMW Holdings Bhd shares.
Earlier it was reported that UMW Aerospace Sdn Bhd won a contract from the British aerospace company to manufacture fan casings for Rolls-Royce Trent 1000 and Trent 7000 aircraft engines.
Following the 15-year contract, UMW Aerospace will invest up to RM65 million to build a new factory to produce the component.
This good news has driven the rise of UMW Holdings Bhd shares to rise higher when they opened in early trading today at RM3.92 before paring the gains to trade at around RM3.87.
Following the report as well, RHB Investment Bank Bhd maintains a 'buy' recommendation on UMW with the target price (TP) unchanged at RM5 per share.
In a note published on Tuesday, RHB analysts were positive about the development which also signals a recovery in UMW's aerospace segment.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) also maintains a 'buy' recommendation on UMW, with TP unchanged at RM4.25.
According to HLIB analysts, the new contract is another success for UMW to gain a foothold in the high-value aerospace supply chain.
For the record, this is the second contract received by UMW after the first contract obtained 8 years ago worth RM830 million from Rolls-Royce.
