PRESBHD (5204) - Prestariang - A better year ahead
Target RM3.36 (Stock Rating: ADD)
At 77% of our forecast, Prestariang’s FY14 net profit was below market and our expectations mainly due to the delays in securing the IC Citizen (ICC) contract extension from the government in 2014. However, we expect the company to get the ICC contract extension soon. We maintain our FY15-16 EPS and introduce our FY17 forecast. Our target price is maintained at 19.2x FY16 P/E, at 20% premium over the target for the sector to reflect the potential earnings boost from its private placement proceeds. The stock remains an Add, with the securing of the PISA accelerated training project and the “IC Citizen” contract extension as potential catalysts.
FY14 net profit down 52% yoy
Prestariang’s FY14 revenue was down 34% yoy but net profit declined by a sharper 52% as the company did not secure contract extensions for the IC Citizen, which was one of the company’s main earnings contributors in 2013. Prestariang declared final DPS of 0.5 sen for 4Q14, bringing full-year DPS to 4.1sen (or 98% dividend payout ratio in FY14), which is below our expectation of 5.5 sen.
Newsflow turning positive
Newflow on Prestariang was disappointing in 2014 but there are signs of positive turnaround. At end-Dec 2014, MARA emerged as a new minority shareholder in UniMY (university should finally break even in 2015, based on our estimates) and in Jan 2015, the company secured the distribution and maintenance of Microsoft software for all government ministries. We are hoping that the company will secure the PISA accelerated training programme (PAP), which targets Science and Math teachers of 14-to 15-year-old students, over the next few months. The company completed the pilot project for the PAP in 3Q14 and we understand that the feedback was very positive.
Rich balance sheet, with net cash position
Prestariang’s balance sheet is strong, with RM136m net cash or RM0.28 net cash per share. The company is working on increasing recurring income and we believe that its cash pile will mainly be used for this purpose. The 4Q14 results briefing is scheduled for Thursday morning (26 Feb).
Source: CIMB Daybreak - 26 February 2015
Target RM3.36 (Stock Rating: ADD)
At 77% of our forecast, Prestariang’s FY14 net profit was below market and our expectations mainly due to the delays in securing the IC Citizen (ICC) contract extension from the government in 2014. However, we expect the company to get the ICC contract extension soon. We maintain our FY15-16 EPS and introduce our FY17 forecast. Our target price is maintained at 19.2x FY16 P/E, at 20% premium over the target for the sector to reflect the potential earnings boost from its private placement proceeds. The stock remains an Add, with the securing of the PISA accelerated training project and the “IC Citizen” contract extension as potential catalysts.
FY14 net profit down 52% yoy
Prestariang’s FY14 revenue was down 34% yoy but net profit declined by a sharper 52% as the company did not secure contract extensions for the IC Citizen, which was one of the company’s main earnings contributors in 2013. Prestariang declared final DPS of 0.5 sen for 4Q14, bringing full-year DPS to 4.1sen (or 98% dividend payout ratio in FY14), which is below our expectation of 5.5 sen.
Newsflow turning positive
Newflow on Prestariang was disappointing in 2014 but there are signs of positive turnaround. At end-Dec 2014, MARA emerged as a new minority shareholder in UniMY (university should finally break even in 2015, based on our estimates) and in Jan 2015, the company secured the distribution and maintenance of Microsoft software for all government ministries. We are hoping that the company will secure the PISA accelerated training programme (PAP), which targets Science and Math teachers of 14-to 15-year-old students, over the next few months. The company completed the pilot project for the PAP in 3Q14 and we understand that the feedback was very positive.
Rich balance sheet, with net cash position
Prestariang’s balance sheet is strong, with RM136m net cash or RM0.28 net cash per share. The company is working on increasing recurring income and we believe that its cash pile will mainly be used for this purpose. The 4Q14 results briefing is scheduled for Thursday morning (26 Feb).
Source: CIMB Daybreak - 26 February 2015
