Prestariang - Set To Dominate |
Date: 15/11/2013
| Source | : | RHB | ||||||||
| Stock | : | PRESBHD | Price Target | : | 3.37 | | | Price Call | : | BUY | |
| Last Price | : | 2.50 | | | Upside/Downside | : |  +0.87 (34.80%) | ||||
Our meeting with Prestariang (PRES) reaffirmed the company’s robust prospects. We expect no major surprises from its 9MFY13 results due for release on 20 Nov and remain positive on its recently announced M&A venture. Maintain BUY, with our FV pushed up to MYR3.37 (vs MYR2.70) based on higher 15.0x FY14 P/E as we expect a slew of O&Grelated training contracts to propel the share price to new highs.
- Sturdy 9MFY13 numbers expected. Prestariang is set to release its 9MFY13 results on 20 Nov. We foresee no major surprises and expect the company’s 9MFY13 net profit to come largely in line with our full-year forecast of MYR45.3m as we gather that it is business as usual at the company’s core ICT training and certification as well as software licensing distribution division. Meanwhile, we expect to more new developments relating to its O&G division in the company’s upcoming results briefing on 21 Nov.
- Generous dividend payout likely. We expect PRES to announce a third interim dividend per share (DPS) of 3.5 sen for 3QFY13. Hence, its full year payout would come to a DPS of 11.0 sen for FY13 and 12.0 sen for FY14. This will translate into a lucrative annual yield of around 5%.
- Sizzling prospects in O&G. on another matter, PRES announced yesterday that its wholly owned subsidiary, Prestariang O&G SB, has proposed to acquire an 80% equity stake in Time Out Skills Academy SB (TOS) for a total consideration of MYR640k. it has, at the same time, secured a contract worth MYR2.2m to implement the Peneraju Tunas Iltizam programme for 240 students over a period of two years. We believe this job is the company’s third involving the provision of O&G training and certification for the O&G industry.
- Maintain BUY. All said, we maintain our BUY call, and nudge up our FV to MYR3.37 from MYR2.70 previously, based on a higher 15.0x (from 12.0x) FY14 P/E as we expect the company to secure a slew of O&G training-related contracts in the near term to propel its share price to new heights.
Corporate Highlights
Sturdy 9MFY13 numbers expected. We expect no major surprises from Prestariang’s upcoming 9MFY13 results, due for release on 20 Nov. We see no major surprises and expect the 9MFY13 results to be in line with our full-year forecast of MYR45.3m. This is because we gather that business is running as usual at its existing core ICT training and certification as well as software licensing distribution arms. Meanwhile, we expect to more developments relating to its O&G division at PRES’ upcoming results briefing on 21 Nov.
Sturdy 9MFY13 numbers expected. We expect no major surprises from Prestariang’s upcoming 9MFY13 results, due for release on 20 Nov. We see no major surprises and expect the 9MFY13 results to be in line with our full-year forecast of MYR45.3m. This is because we gather that business is running as usual at its existing core ICT training and certification as well as software licensing distribution arms. Meanwhile, we expect to more developments relating to its O&G division at PRES’ upcoming results briefing on 21 Nov.
Generous dividend payout likely. We expect PRES to pay out a third interim DPS of 3.5 sen for 3QFY13 given its asset light business model as well as strong net cash position of MYR34.8m as of 2QFY13. We continue to anticipate a DPS of 11.0 sen for this year and 12.0 sen for FY14, which will translate into a lucrative yield of around 5% per annum over the next two years.
New O&G training academy. Meanwhile, PRES announced that its wholly-owned subsidiary, Prestariang O&G SB, has entered into a sales and purchase share agreement to acquire 80% equity in Time Out Skills Academy SB (TOS), which would later be renamed Prestariang Academy SB, for a total consideration of MYR640k. TOS is involved in the business of training and conducting technical skills courses for professionals and providing management consultancy services for the O&G sector. Overall, we are positive on PRES’ move to acquire the academy for its O&G course materials so that it can immediately begin to roll out skills certification training programmes for young recruits in areas such as welding, scaffolding, pipefitting and fabrication in the O&G industry. We understand that the acquisition will be fully funded via cash. As of 2QFY13, PRES was sitting on a comfortable net cash of MYR34.8m.
Another contract in the bag. The acquisition coincides with PRES being awarded a letter of award from Yayasan Peneraju Pendidikan Bumipetera (YPPB) to implement the Peneraju Tunas Iltizam programme, which we believe would likely be conducted entirely under TOS. Under this programme, the company will provide skills training certification for riggers, scaffolders and pipefitters involving 240 students for a period of two years. The total contract sum is MYR2.2m. Although the contract is relatively small, it solidifies PRES’ position in the O&G industry. Hence we expect more O&Grelated contracts to come on board.
Maintain BUY. Although PRES’ share price has run up by some 22.0% since October, we believe a re-rating is in store given that the M&A has been announced and management has indicated that it has secure more potential contracts in O&Grelated training and certification contracts in the pipeline. Given its undemanding valuations against its education peers, we are lifting our FV to MYR3.37 (from MYR2.70), based on a higher 15.0x (from 12.0x) FY14 P/E. PRES remains our Top Pick as well as the cheapest proxy to the education sector. Maintain BUY.
Financial Exhibits
SWOT Analysis
Company Profile
Prestariang provides ICT services focused on professional training and certification with industry partners such as Microsoft , IBM, Oracle and Autodesk
Prestariang provides ICT services focused on professional training and certification with industry partners such as Microsoft , IBM, Oracle and Autodesk
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