PRESBHD (5204) - Prestariang - Work on ICC and 3P has started
Target RM3.36 (Stock Rating: ADD)
At Thursday’s Invest Malaysia Conference 2015, there were no major surprises. The IC Citizen (ICC) and 3P contracts finally started work again in 2Q15. We were earlier expecting work to start in 1Q. We maintain our EPS 5forecasts and target price, which is pegged to 19.2x FY16 P/E – a 20% premium over our target P/E for the sector to reflect the potential earnings boost from its private placement proceeds. The stock remains an Add. Potential catalysts include securing the PAP project and news that work has started again for the IC Citizen and 3P contracts.
What Happened
Prestariang participated in the Invest Malaysia Conference 2015 conference yesterday and met around 50 fund managers (in small group meetings). There were no major surprises and recent updates were : 1) work on the 3P and IC Citizen (ICC) projects started again in 2Q15. There were some delays in 1Q15 due to budget allocation issues but they were resolved this quarter, and 2) Prestariang is looking to finalise the sale of a 30% stake in UniMy to MARA over the next few weeks. The delay of the UniMY sale was due to the need to secure approvals from the Ministry of Education.
What We Think
We believe the recommencement of the 3P and ICC contracts is a relief to investors as this will allay concerns over whether Prestariang could secure more jobs from these two projects. We maintain our EPS forecasts as we have already assumed that work on the 3P, MUSE and ICC projects will start again this year. Completing the sale of a 30% stake in UniMY to MARA will also reassure investors that the worst is over for UniMY. If all goes well, UniMY could actually be profitable in 2015. However, we were a little disappointed that the potential PAP job should only be finalised in 2H15 (we were expecting some newsflow in end 1Q15). However, we remain long-term bullish on PAP as we believe that the authorities is focused on boosting student PISA numbers. There are currently around 70,000 teachers for maths and science.
What You Should Do
Remain invested in the stock. The stock has done well, up 80% in 1Q15, and was the top performer in our small-cap universe. W continue to believe the stock could still have more upside in the coming months as newsflow should remain positive when the company finalises the PAP contract. Prestariang is also looking to finalise a major strategic project in 2H15. Management indicated that it has been looking to grow its recurring income since early 2014.
Source: CIMB Daybreak - 24 April 2015
Target RM3.36 (Stock Rating: ADD)
At Thursday’s Invest Malaysia Conference 2015, there were no major surprises. The IC Citizen (ICC) and 3P contracts finally started work again in 2Q15. We were earlier expecting work to start in 1Q. We maintain our EPS 5forecasts and target price, which is pegged to 19.2x FY16 P/E – a 20% premium over our target P/E for the sector to reflect the potential earnings boost from its private placement proceeds. The stock remains an Add. Potential catalysts include securing the PAP project and news that work has started again for the IC Citizen and 3P contracts.
What Happened
Prestariang participated in the Invest Malaysia Conference 2015 conference yesterday and met around 50 fund managers (in small group meetings). There were no major surprises and recent updates were : 1) work on the 3P and IC Citizen (ICC) projects started again in 2Q15. There were some delays in 1Q15 due to budget allocation issues but they were resolved this quarter, and 2) Prestariang is looking to finalise the sale of a 30% stake in UniMy to MARA over the next few weeks. The delay of the UniMY sale was due to the need to secure approvals from the Ministry of Education.
What We Think
We believe the recommencement of the 3P and ICC contracts is a relief to investors as this will allay concerns over whether Prestariang could secure more jobs from these two projects. We maintain our EPS forecasts as we have already assumed that work on the 3P, MUSE and ICC projects will start again this year. Completing the sale of a 30% stake in UniMY to MARA will also reassure investors that the worst is over for UniMY. If all goes well, UniMY could actually be profitable in 2015. However, we were a little disappointed that the potential PAP job should only be finalised in 2H15 (we were expecting some newsflow in end 1Q15). However, we remain long-term bullish on PAP as we believe that the authorities is focused on boosting student PISA numbers. There are currently around 70,000 teachers for maths and science.
What You Should Do
Remain invested in the stock. The stock has done well, up 80% in 1Q15, and was the top performer in our small-cap universe. W continue to believe the stock could still have more upside in the coming months as newsflow should remain positive when the company finalises the PAP contract. Prestariang is also looking to finalise a major strategic project in 2H15. Management indicated that it has been looking to grow its recurring income since early 2014.
Source: CIMB Daybreak - 24 April 2015
