To recap, a RM3.5bn contract for the new immigration system to replace MyIMMS was initially awarded to PRESBHD in 2017, by previous administration, through a public private partnership (PPP) model covering a concession period of 15 years. However, this project was terminated last December. Hence, PRESBHD is seeking mediation against government for RM732.9m in compensation. Soon after the news was released, market viewed this mildly positive and the stock traded higher. We believe the technicals are improving and buying interest could spur the share price higher towards RM0.54-0.64, followed by RM0.80, while support is set around RM0.445-0.45. Cut loss is set around RM0.43.

PRESBHD seeking mediation against government. Following the termination of the SKIN project last December, PRESBHD is now seeking mediation to settle the matter out of court with a compensation sum of RM732.9m, which market participants may be viewing this piece of news as a positive progress for now. Meanwhile, the new immigration system tender attracted 30 bids, ranging from RM1.0-1.8bn for the development of the Integrated Immigration System (IIS). The government is in the process of pre-qualifying the bidders after the tender was closed on Aug 19.

Trendline breakout. PRESBHD has stabilised around the SMA200, experiencing a trendline breakout accompanied by improved volumes. The ADX indicator has turned positive (ADX > -DMI), suggesting that the uptrend could be forming. Hence, we believe the buying interest may extend the share price towards RM0.54-0.64, with a LT TP set around RM0.80. Support is pegged around RM0.445-0.45, with the cut loss located around RM0.43.

Source: Hong Leong Investment Bank Research - 27 Sept 2019