CEO Morning Brief

Pintaras Jaya Rises to 14-month High After Announcing 3Q Results

Publish date: Wed, 22 May 2024, 11:34 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 21): Shares in Pintaras Jaya Bhd (KL:PTARAS) rose to their highest in 14 months, though analysts remained doubtful of further gains, as the earthworks company homed in on the consensus target price.

Pintaras rose as much as 12% or 20 sen to RM1.90, its highest since March 7, 2023. The stock ended Tuesday at RM1.80, valuing the company at RM299 million. Trading of the stock was also more active than usual, with volume at nearly 14 times its 200-day moving average.

“FY2024 (the financial year ending June 30, 2024) has been a tough operating year for Pintaras Jaya, due to the weak margins that it has to take on and the liquidated damages for project delays,” said MIDF Amanah Investment Bank, which maintained its “neutral” call on the stock.

The research house, one of only three covering the stock, flagged the nature of its business, where contracts usually have shorter time frames, making it crucial for the company to continue replenishing jobs.

Shares in Pintaras have risen 13% so far this year amid a broad rally in the construction sector, fuelled by optimism about major infrastructure project roll-outs by the government. The consensus 12-month target price is RM1.82, according to Bloomberg.

However, Pintaras’ quarterly earnings have been volatile.

On Monday, Pintaras announced that its net profit rose 18% to RM4.32 million for the three months ended March 31, 2024 (3QFY2024) from the same period a year earlier. That was better than expected, thanks to fair value gain from quoted investments, though its construction operations were loss-making.

The company reported quarterly losses for 2QFY2024, 4QFY2023, and 1QFY2023.

Pintaras’ management appeared “hopeful for more jobs with better rates in 2025 when larger government projects like the Penang LRT, flood mitigation and Pan Borneo, and more private sector projects kick off”, said Maybank Investment Bank, which also has a “hold” call on the stock.

The research house now expects Pintaras to record a small RM1 million net profit for FY2024 compared to its previous forecast for a RM1 million loss.

On its part, Pintaras said its outstanding construction order book worth about RM316 million will help the company “navigate through the next few challenging months” while noting “an upturn in construction activities”.

Overall, FY2024 is expected to be “very tough” for Pintaras, the company cautioned, adding that the financial year will nevertheless be profitable.

Source: TheEdge - 22 May 2024

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