PRESBHD (5204) : Prestariang - The worst is over
Target RM2.94 (Target: ADD)
During today’s 3Q14 results briefing, Prestariang voiced its view that 2015 should be a much better year. The company is working on some new projects and we believe the newsflow should be positive over the next few months. We maintain our EPS forecasts and target price (19.2x FY16 P/E, 20% premium over sector target). Our unchanged Add call is premised on potential catalysts such as success in landing the PISA accelerated training contract, “IC Citizen” contract extension and a new UniMY shareholder.
What Happened
At today’s 3Q14 briefing, there were a few positive surprises which included i) the company has just completed the pilot programme for the PISA accelerated training programme (PAT) and the initial results were positive. With the government’s focus on improving the country’s PISA rating, we believe the company stands a good chance of securing the PAT nationwide contract. The next PISA assessment will be in 2015. We have not assumed any potential earnings from PAT. ii) Prestariang could get the IC Citizen contract extension soon. The company’s earnings in 2014 were hit by the delay in securing the contract extension. Although we have assumed extension of the IC Citizen contract in 2015, confirmation of this would be a major confidence booster for investors. iii) The Big Data Competency Centres (BDCC) initiative could start in 2015. Prestariang is looking to train 3,000 students on big data analysis. We have not assumed any earnings from BDCC. iv) MARA is expected to bring in annually 500 sponsored students to UniMY. The first batch of students will come in Dec 2014 and the next quarter. This should help UniMY to at least break even in 2015. UniMY is losing around RM1.6m every quarter.
What We Think
We believe the worst is over for the company and it could secure new projects soon. The company is still working on the major long-term recurring income project and we could see some newsflow on this in the next 1-2 quarters. Prestariang could surprise in a big way soon by clinching the PAM nationwide contract.
What You Should Do
Remain invested in the stock. 2015 earnings should see a strong recovery and newsflow ahead should be positive, starting with yesterday’s MARA UniMY announcement. Its recent share price weakness due to disappointing 3Q results provides an opportunity to accumulate the stock.
Source: CIMB Daybreak - 28 November 2014
Target RM2.94 (Target: ADD)
During today’s 3Q14 results briefing, Prestariang voiced its view that 2015 should be a much better year. The company is working on some new projects and we believe the newsflow should be positive over the next few months. We maintain our EPS forecasts and target price (19.2x FY16 P/E, 20% premium over sector target). Our unchanged Add call is premised on potential catalysts such as success in landing the PISA accelerated training contract, “IC Citizen” contract extension and a new UniMY shareholder.
What Happened
At today’s 3Q14 briefing, there were a few positive surprises which included i) the company has just completed the pilot programme for the PISA accelerated training programme (PAT) and the initial results were positive. With the government’s focus on improving the country’s PISA rating, we believe the company stands a good chance of securing the PAT nationwide contract. The next PISA assessment will be in 2015. We have not assumed any potential earnings from PAT. ii) Prestariang could get the IC Citizen contract extension soon. The company’s earnings in 2014 were hit by the delay in securing the contract extension. Although we have assumed extension of the IC Citizen contract in 2015, confirmation of this would be a major confidence booster for investors. iii) The Big Data Competency Centres (BDCC) initiative could start in 2015. Prestariang is looking to train 3,000 students on big data analysis. We have not assumed any earnings from BDCC. iv) MARA is expected to bring in annually 500 sponsored students to UniMY. The first batch of students will come in Dec 2014 and the next quarter. This should help UniMY to at least break even in 2015. UniMY is losing around RM1.6m every quarter.
What We Think
We believe the worst is over for the company and it could secure new projects soon. The company is still working on the major long-term recurring income project and we could see some newsflow on this in the next 1-2 quarters. Prestariang could surprise in a big way soon by clinching the PAM nationwide contract.
What You Should Do
Remain invested in the stock. 2015 earnings should see a strong recovery and newsflow ahead should be positive, starting with yesterday’s MARA UniMY announcement. Its recent share price weakness due to disappointing 3Q results provides an opportunity to accumulate the stock.
Source: CIMB Daybreak - 28 November 2014
