Investment Highlights

• We raised our FY19-20F forecast by 3% annually, increase our SOP-based FV by 2% to RM1.45 (from RM1.42) and maintain our BUY call.

• This follows the road maintenance concession extension awarded by the Perak state government to Protasco’s 51%-owned Empayar Indera Sdn Bhd, to undertake routine and periodic maintenance work for the following: 1) state road spanning across 1,900km for 5 years with an extension of another 2 years till December 2026; and 2) agriculture roads spanning across 13,100km for 5 years with an extension of another 2 years till February 2026 in the state of Perak.

• The concession renewal would potentially add on to its current road maintenance concession order book by >RM700mil to RM5.3bil which is expected to last for 7 years and expected to contribute positively to Protasco’s FY19 earnings and beyond.

• Additionally, Protasco’s 51%-owned subsidiary company Roadcare has secured an 8-year federal road maintenance concession extension following the expiry of 2-year interim period (i.e. Feb 2016 to Feb 2018) with an estimated outstanding order book of RM3.3bil. This road maintenance concession includes routine and periodic maintenance work of peninsular federal road concession maintenance covering the central and eastern regions of Peninsular Malaysia spanning across 7,300km.

• We continue to like Protasco for: 1) the recurring income stream from its road maintenance concessions with an outstanding value of RM5.3bil 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 - 6 Apr 2018