No Major Deviations

Pintaras continues to uphold sustainability as a core priority. In FY22, the group has identified 3 key themes of sustainability practices: sustainable business growth, environmental stewardship, and social responsibility. In all, we are encouraged by Pintaras' efforts in managing its ESG risks. What it lacks however, is in meeting the Malaysian Code on Corporate Governance's recommendations on independent director and gender diversity, amongst others. We have a HOLD on the stock. Our unchanged TP is MYR2.20 based on 7x FY23E core EPS plus net cash (+ FA).

Managing the “E” and “S” Matters

In environmental stewardship, Pintaras focuses on energy management and material wastages, while employees' safety & health, and training are among the focus of its social responsibility theme. In its latest FY22 Annual Report (published on 20 Sep), Pintaras revealed that its average wastage of steel bars was a low 4-6% and ready-mixed concrete 5-16%, and it has set similar targets for FY23E. Pintaras minimises material wastage by setting theoretical % of tolerable wastage for every project.

Lacking in Some “G” Aspects

Pintaras has adopted a Code of Conduct since Jun 2008 (last reviewed in May 2020) and it had, in May 2020, adopted the Anti-Bribery and Anti-Corruption Policy. It also has in place a Whistleblowing Framework; there were no whistleblowing cases reported in FY22. However, independent directors and women directors made up just 28% of its total Board composition, short of the recommended 50% and 30%, respectively.

Thumbs Up on Customers Satisfaction

Customers feedback on Pintaras' products and services have been positive. In FY22, 100% of its clients responded to its customer satisfaction survey, out of which, 90% said that the group has met or exceeded their expectations. This bodes well for Pintaras’ brand-building, reaffirming its leadership position in piling and foundation construction, with a long track record (since 1989).

Source: Maybank Research - 22 Sept 2022