Initiate with HOLD and MYR2.40 TP

We initiate coverage on Pintaras with a HOLD and MYR2.40 target price based on 7x FY23E core EPS plus net cash (+ financial assets) of e.98sen/ sh end-FY22E. We forecast weaker core net profit in FY22E (-40% YoY) and flattish growth in FY23E (+2% YoY) on the expectation construction costs will stay elevated. Positively, its high cash (+ near cash) level above working capital needs (at 35% of the stock’s current market value), should provide support amid the challenges posed by rising costs.

Long-established track record

Pintaras is a leading piling and foundation specialist with a long track record (since 1989). It undertakes a hands-on approach, minimising sub- contracting to 3rd parties, to ensure quality and efficiency. Pintaras maintains a sizeable fleet of top-range equipment - drilling rigs, crawler cranes, vibro-hammers, etc. - offering a diverse range of geotechnical works. It has completed c.MYR2.75b of works since 2000, with key clients including the Malaysian government and prominent property developers.

Singapore the main earnings driver

Pintaras entered Singapore (SG) in 2018. SG is now the main driver; it has contributed c.80% to group revenue since FY19. Pintaras’ two-market presence – in Malaysia (MY) and SG - has served the group well in supporting job wins and margins. Of its tender book of MYR1.5b end-Jun 2022, c.80% is in SG comprising a 50:50 mix of private-to-public sector projects. On the macro front, our Economics Team expects SG’s construction sector recovery in 2022-23 to be quicker than MY’s.

Order book provides 12M visibility

Outstanding order book stood at MYR330m as at end-Mar 2022 (end-FY21: MYR450m). This offers earnings visibility into FY23E, with the duration of most of the works being short-term in nature (<12 months). Our earnings forecasts have imputed MYR300m of job wins in FY23E.

Source: Maybank Research - 4 Aug 2022