DMG & Partners initiated coverage of AusGroup Ltd, which provides services to the mining and oil and gas industries, with a 'buy' rating and a target price of S$0.755, citing a positive industry outlook.
By 0210 GMT, AusGroup shares were up 2 percent at S$0.505, and have surged 60 percent since the start of the year, compared to the FTSE ST Industrials Index's 20.5 percent rise.
A record A$261 billion has been committed towards capital expenditure in 98 major minerals and energy projects between 2012 and 2016 in Australia, DMG said, which will benefit AusGroup.
The brokerage expects AusGroup to see net profit growth of 29 percent on an average a year over the next three years, helped by improving net margins.
The company also said it was planning to spin off its operating subsidiaries in a listed entity on the Australian Securities Exchange (ASX).
"If this plan goes through, AusGroup shareholders stand to gain as the industry average forward price-to-earnings on the ASX is 10 times versus AusGroup's 5.4 times today," said DMG.
Reporting by Charmian Kok in Singapore; firstname.lastname@example.org