Scuttlebutt
How should we see Prestariang? - Beatingthestreet
Beatingthestreet
Publish date: Wed, 28 Nov 2018, 11:59 PM
The change of government had let me notice into Prestariang, but it did not attract me to study it thoroughly until big shareholders retirement fund kwap started to dispose their shares then followed by aia. Apparently, SKIN (project is the only reason attracts us as this multi-billion ringgit border control project. The last official update for skin project is the sign agreement on 25th April 2018, followed by finance facility granted by bpmb (Bank Pembangunan malaysia berhad) on 26th September of 2018. I have noted that this BPMB is wholly owned by ministry of finance. I have no idea if it means this project is nodded by the PH government but i believe this should be a good start by implementing this security border system there is indirectly contribution involved by the government bank.
Share price that plunged down after Kwap sell their stakes - I believe this had something to do with the resignation of Puan Nik Amlizan Binti Mohamed as an non-executive director since she had resigned kwap as a chief investment officer too. But the main reason share price were on free fall is on AIA selling its 9.73% stake which is around 46,968,900 shares in within weeks. Even CEO Dr Abu Hasan Ismail were forced selling due to margin call.
All of this uncertainty come to the heavy rely of this company towards this 3.5billion ringgit worth contract. Apparently, none of us know if this project would continue without modification so any big fluctuation on share price is expected. Ph government had been emphasising the government need to cut cost on spending to control its fiscal position. However, our current national security system MyIMMs IT infrastructure network is more than 20 yrs old and it was already outdated no matter how you upgrade it.
Added salt to wound, inland revenue board has imposed a tax penalty of Rm2.3million and arises the difference in interpretation under 2013-2016 assessment of Rm5.3million additional tax. This does impact a lot to Q3 18, but however one should not magnify it as it is an one off expense. As we know SKIN project is the main driver to the company. Like other concession business under BOT (build, operate and transfer), once they completed the progress, revenue would be recognised in income statement. In latest Q3 18 report, other than one off tax expenses that contribute to the loss, its ICT and education segment has dropped significantly too. Main driver, concession project SKIN has recognised lower revenue Rm21,654,000 due to slower than expected progress. Myacknowledgement with management target is to completed 30% by this year end, which i think would be delay but revenue would still recognised eventually if there is no modification or termination of SKIN project. Also, dividend will expected to reduce significantly since cash flow will be depending on the financing from BPMP until 2021, that's when annual payment of Rm294.7million from government comes in. With market cap of Rm271m (Rm0.56/share), could it more attractive onwards with its first quarter loss since 2011 with bad market sentiment like this. My investment style is to have deep thought on business perspective first before any fundamental and technical analysis should apply in. Merely looking at its concession business, there is still huge potential inside. What we should be focusing is its concession progress as figure below.
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PublicInvest and Cimb have both covered its SKIN projects to worth at least RM1.08 per share or more, and even without SKIN project the company have an fair value of RM 0.44 per share based on earnings of 13 times. Of course, these are only references that i believe derived from DCF. Let us monitor and track how SKIN project goes, rather than sticking our eyes on share prices. This year particular on prestariang, it seems to me that it's becoming safer to join the boat as its becoming cheaper. Of course for major shareholders that had been acquired for a while, they have been struggling to adapt with our new government environment
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2018-11-29 08:02