Investment Highlights

• We raised our FY18-19F forecast by 6% and 12% respectively, increase our SOP - based FV by 5% to RM1.39 (Exhibit 1) (vs RM1.33) and maintain our BUY call.

• This follows the award by Unit Perumahan Penjawat Awam 1Malaysia, Jabatan Perdana Menteri to the 51:49 Protasco Development Sdn Bhd (wholly owned) – Kop Mantap Berhad for the construction of 1,681 unit apartments under the Pembangunan Projek Perumahan Penjawat Awam 1Malaysia (PPA1M) in Putrajaya, worth RM442.7mil. Protasco’s share is RM225.9mil and the job is expected to be completed within the next 30 months.

• This recent award would contribute positively for Protasco’s FY18 earnings and beyond. This contract has boosted Protasco’s YTD job wins to RM312mil (which has surpassed our full year FY17F forecast assumption of RM135mil) and outstanding construction order book to RM813mil (Exhibit 2).

• The earnings upgrade is to reflect the upward revision in our job replenishment assumption for FY17F to RM312mil. Meanwhile, we are keeping our assumption for job wins in FY18-19F of RM150mil and RM200mil respectively.

• We continue to like Protasco for: 1) the recurring income stream from its road maintenance concessions with an outstanding value of RM4.0bil which will last until 2026 (and beyond if they are renewed); 2) its growing conventional construction business, particularly the affordable housing segment; 3) the tremendous value of its landbank in Bangi, KL; and 4) its attractive dividend yield of 5-7% per annum.

Source: AmInvest Research - 22 Dec 2017