• 1QFY19 slipped into net core loss of -RM0.3m mainly on lower margin mix from its Singapore unit and higher tax rate due to under provision in prior financial year.

• We cut our earnings forecast by -22.1%/-60.4% for FY19F/FY20F after taking the consolidation impact of its Singapore unit.

• HOLD with a lower SOP-derived TP of RM2.30 (from RM2.35). Despite attractive dividend yield of 8% at current level, we are cautious on downside risk to earnings after consolidating with Singapore unit given that it is loss making since FY17.

Disappointing start

1QFY19 recorded a core net loss of -RM0.3m mainly due to lower margin mix from its Singapore unit and higher tax rate as a result of under provision in prior financial year. To recap, Pintaras completed the acquisition of Pintary International, a Singapore-based company, for RM16.9m in Sep 2018. We were negative with the acquisition due to hefty price tag given it was a loss making company since FY17 (despite stable progress billing c.RM80m) and net debt position of RM24m.

Cut earnings forecast for FY19F/FY20F

After taking the consolidation impact of its Singapore unit, we cut our forecast by -22.1%/-60.4% respectively as we expect low margin on its project mix and depleting orderbook from Malaysia unit. Currently, its orderbook stands c.RM245m of which c.RM225m is from Pintary International (including the recent job secured of RM45m). Its existing orderbook could only last for one year.

Maintain Hold with TP of RM2.30

HOLD with reduced SOP-derived RM2.30 TP (from RM2.35). We remain cautious on downside risk of its earnings after consolidating with its Singapore unit due to loss making company since FY17 while earnings visibility is limited to just a year.

Source: BIMB Securities Research - 29 Nov 2018