Pak Lah

Let me share with you what I know about this company Ptaras. The bosses really know their stuffs very well, they have prior experience in the same industry before they set up this company. To begin with, they undertook small scale projects which was relatively less complicated, allowing their young engineers to pick up the skills. They subsequently ventured into medium-scale projects. Acquiring both the design and field knowledge in the piling industry is essential as this can improve the work sequence. Half-baked specialist contractors are commonly known to make mistakes in the field which would always result in corrective works /double-handling and slapped with delay penalty, their margins are eaten as a result. To qualify as a good specialist contractor, ones must be able (i) to constantly win projects (a good reputation would certainly help); (ii) to successfully handover project to owners/employers in time (liability off the shoulders); and (iii) to be able to collect the retention sums (receivables). Clearly, Ptaras have the above qualities. In addition, they now own full-range piling machineries which can save them a lot of construction costs.
Another plus point: They are growing organically (they only do what they are good at).

2014-06-13 13:00

sook

Thanks for a good write-up

2014-06-13 17:24

sl3ge

thanks pak lah, are u in this field?

2014-06-14 15:23

calvintaneng

In year 2005 to 2007 there were 3 P Companies under Construction:

1) Prinsiptek
2) Protasco
3) Pintaras Jaya

They were all trading around 70 cts to 80 cts range. Ha! After 9 years Prinsiptek fallen by half & Protasco did well. But The winner is Pintaras Jaya which crossed RM6.00.

Actually, I had sold off all 3 before Lehman Brothers' Debacle in year 2008. One Day I spoke to One Accountant Guy whom I later called "Johor Sifu" who recommended Pintaras Jaya as the only one to buy and Not Prinsiptek or Protasco.

He mentioned Pintaras at RM1.40 as a good buy and gave these reasons:

1) He saw Director Dr. Chiu bought Ptaras at RM1.90. So at RM1.40 It is a cheaper entry price than Insider.

2) Pintaras Jaya is involved in piling. Foundation Work Is First in High Rise Building. So PTaras will get paid First or else Ptaras can sue and the entire project will be stalled. And usually companies still have cash flow in initial stage. He consider this "As A Margin of Safety" for Ptaras. This he learnt from his elder brother who is a Successful Condo builder in Johore.

The interesting thing is - his brother thought little about his younger brother whom I named "My Johor Sifu"

One Day GMutual Bosses came to his elder brother for consultation. And GMutual Bosses told his elder brother that his younger brother is an expert in the Share Market. He was surprised that GMutual bosses thought so highly of his younger brother.

3) Ptaras has good profit margin, cash flow, little or no debt and in strong cash position.

Time has proven him correct on Pintaras Jaya.

As of today he is still holding on to Pintaras Jaya

2014-06-14 15:56

calvintaneng

Margin of Safety In Construction? What is it?

In early 1990s Contractor Mr L from Kajang won a tender to construct over 200 houses in B Utama by the SH C group.

I said to Mr. L, "200 over houses, you must be making lots of money from this B Utama project!" "No", Mr. L replied. Then he told me his story.

Although Mr. Lim built over 200 houses for a reputable company. There were black sheep within. Near the final stages of payment Mr. L was unable to collect payment. Why?

You see, the verification officer or the Quality Control guy gave him obstruction after obstruction at every step. Endless trivial complaints.

Mr. Lim was told to redo & redo many so called "defects" unless he pays something. If he pays something defects suddenly disappeared. Or else he has to do touch up after touch up. And he will go round and round in circles after a wild goose chase for payment.

So you see - work is completed without proper payment. Big projects equal big headache for Mr. L. After that he only bid for small project and required immediate upfront payment.

For Pintaras Jaya the equation is in its favour. Do First, Pay First Or Else "Stop The Whole Project"

2014-06-14 16:32

stockraider

Yes business from piling u can expect gross margin of 60% to 70%.
Why so high ?
Reason....basically it is machinery depreciation and some specialist workmanship mah.....!!

Not much cost....if u already got the machinery with u.
U collect your payment well ahead of other contractor mah....!!

As long as booming construction, u can be assure big profit for pintaras loh.....!!

2014-06-14 16:37

kcchongnz

Many people asked me, "Shall I subscribe to Econpile IPO?". My answer is, if you can prove to me Econpile is a better company than Pintaras, why not? They are in exactly the same business, piling and basement work, exactly, although Pintaras has metal can manufacturing, but that is a small part of its business.

Econpile has been in the market longer than Pintaras Jaya in piling works. It has its activities in Singapore initially. So we can say Econpile is not a new kid in the block. It is just that now it is going public listed in Malaysia.

But just look at its performance as compared to Pintaras:

Company Pintaras Econpile
Revenue 172845 386066
Net profit 52317 27,865
Gross margin 34.7% 14.9%
Operating margin 31.9% 10.3%
Net profit margin 30.3% 7.2%

Econpile's sales is more than twice that of Pintaras Jaya. However, its net profit is just half of that of Pintaras. Pintaras's net profit margin at 30.3% is more than 4 times that of Econpile. These difference in results were consistent over the last few years. So it is clear which is a better company.

Of course good company is one thing, if a not so good company is selling very cheap, then it is another story. Isn't Econpile selling cheap at an IPO of just 54 sen, compared to Pintaras's market price of RM4.35? Of course if you look at that way, 54 sen compared to RM4.35.

But PE wise, Econpile before the IPO is at a PE ratio of 10.4 only compared to 13.3 of Pintaras. Certainly cheaper looking at this way too. But taking the whole thing together, which company do you prefer to buy?

2014-06-14 17:14

AyamTua

anyone follow kcchongnz and calvin tan value investing concept will survived much longer and sleep well at night in Bursa jungle! kikiki

2014-06-15 01:57

Pak Lah

Here is some of the info on Pintaras Jaya & Econpile. Source: thestar dated 31-05-2014

Competitors to Ptaras pre-1997 financial crisis are Pilecon Engineering Bhd, UCP Resources Bhd, L&M Corp Bhd, General Soil Engineering Holdings Bhd. Note: Only Ptaras has survived this crisis.

Present main competitors to Ptaras are Geopancar Sdn Bhd, Sunway Group’s Sunway Geotechnics (M) Sdn Bhd and Econpile Holdings Bhd. Note: Other piling companies unable to undertake complicated foundation works, i.e. piling works for areas situated at established areas, e.g. Warisan Merdeka.

Major tender exercises Ptaras is now participating in are Klang Valley Mass Rapid Transit Line 2, Kinrara Damansara Expressway, West Coast Expressway, Petroliam Nasional Bhd’s refinery and petrochemical integrated development (Rapid). These works worth 2~3bil. Worth noting that all the jobs they are bidding are complicated in nature. Note: I’m disturbed when I saw the protest against Kidex. I hope I would see this project materialised because Ptaras stands a good chance of securing the foundation works.

Ptaras' present book order stand at RM330mil, more than double from a year ago. Dr. Chiu is confident that Ptaras is able to replenish its orderbook as the government is very serious in realising the above mega projects. Note: Piling works for housing estates are not their cup of tea. Virtually all are for high rise buildings at established neighbourhood. In a nutshell, Ptaras is now in a different league, and in turn the high margin is sustainable.

2014-06-15 17:47

kaliaoki

Bauermargin is higher of all, pintaras used to be by subcon and still my subcon but high risk all below ground work unpredictable n pintaras is lousy in substrucutre work except bored piles

2014-06-15 18:03

Pak Lah

sl3ge, I'm working for a construction company, and have some knowledge in foundation works.

2014-06-15 18:04

kaliaoki

Small cap easy to fry like 90 so many 2nd board construction counter rm50 or more and now all almost kaput

2014-06-15 18:08

kaliaoki

Their management got no system, therfore at site shouting at everyone to get work done n defects took umpteen yrs to rectify,always underestimate work difficultiness, previously we awarded few hundred mil jobs to them but not now as we looking at professional contractor design b build with good team ,there r at least 2 dozen local bored piling contractors and half dozen more fr china and few more fr singapore in m'sia.

2014-06-15 18:14

KiaSu

Can someone from Pintaras Jaya answer Kaliaoki comments.

2014-06-15 22:44

Pak Lah

Kalioki, you expect the site personnel to behave the way their colleagues behave in the office? You wanted the site personnel to do away with shouting, and you preferred them to greet their banglas with more polite tones, e.g. How are you sirs, may I help you? Be real, this would never work in this field.

You mentioned that ptaras took years to rectify defects? Rectify defects for foundation works? You must be kidding.

And you mentioned that the management has got no system? What system? Entertainment system for the main contractors? Who cares when they are able to consistently generate astounding revenue growth and profit margins over the past 5 years?

2014-06-15 23:53

kaliawke

there are many smaller and beauty bored piling contractors in town and Pintaras only captured 30% of market. World Giant like Bachy and Bauer prefer not to touch as the risk is high unless design and build

2014-06-16 09:53

kaliawke

stay away, I know all the directors and they themselves never pick

2014-06-16 09:55

Firebird2

They will report better performance in the next few quarters with the extra jobs that they have recently, don't you think so?

2014-06-16 09:58

kaliawke

TP 3.50

2014-06-16 10:00

Firebird2

Unlikely to be at that level.

2014-06-16 10:10

kaliawke

privatise at thin volume and not justify to present, collect from market and press down later to privatise

2014-06-16 10:31

Firebird2

I don't see that happening. As an investor, I do see the company getting more jobs and higher profile jobs. The company will do well in the coming quarters, however if the market does not value all this, the price may drop, yes there can be a pressed down in prices, manipulation, sharks, whales, whatever, but then buyers who sees value in it, will emerge to take it up. Long term player isn't bothered by them at all and will see this as an advantage. 5 years ago, it was only Rm0.60, (5 year chart).

2014-06-16 10:43

Firebird2

I really don't know why you guys think its not a good investment. Some of the comments here may happen, but its applicable to all counters, not just this. If you do have any info that is convincing, and will negatively affect this company, I am prepared to sell off all.

2014-06-16 11:12

kaliawke

design and build and all underground is risky business as you do not know exactly the soil profile and cant see it . one big jobs screw up will wipe off yrs of profit

2014-06-16 13:59

LouisChoo

Can anyone advise the "real value" of Econpile in terms of stock price ?

2014-06-16 17:11

Pak Lah

There is a short supply in this industry, i.e. piling contractors are presently overwhelmed with jobs thanks to the massive spending on infrastructure works by the Government. The BFM89.9 this morning interviewed Econpile Holdings Bhd's Raymond Pang. Insights/prospects for the piling works in Malaysia were discussed at length. http://www.bfm.my/breakfast-grille-raymond-pang-econpile.html

2014-06-17 10:49

kcchongnz

The revenue of Econplies is 386m, more than double that of Pintaras, whereas net profit of Econpiles is only 28m, half of that Pintaras. Net profit margin of Econpiles is only 7% compared to the 30% of Pintaras. Why the difference?

My take is this is because Pintaras is smart and not greedy. It only take good projects with easier foundation, such as in the area where the soil is of Kenny Hill Formation type. That is also because of the close relationship of the management with the developers which was built up from years ago that Pintaras is able to cheery pick projects.

The management of Pintaras are not greedy, and simply grab projects in questionable foundation soil such as limestone areas, residual granite with boulders etc. Developers can sought Pintaras's advice on those difficult foundation, but Pintaras always declines to take up those jobs, politely. Because if you encounter those foundation soil, you are in big trouble.

2014-06-17 17:49

kaliawke

there are china and korea bored pile contractors in town now

2014-06-18 08:36