Lowering TP; maintain HOLD

PINT’s 3QFY23 headline net profit of MYR3.7m was supported by FV gain on financial assets of MYR2.2m. Excluding one-offs, core earnings remain weak. We maintain FY23 headline net profit forecast of MYR5m (9MFY23: MYR2.1m) but lower TP to MYR1.70 (-26sen), as we roll forward valuation and peg on a lower P/B. We now use 0.7x FY24E P/B (previously 0.8x FY23E P/B), -1.5SD of LT mean (also its low in early-2012). Medium term earnings outlook remains subdued with an outstanding orderbook of MYR282m or 0.9x our FY23 construction revenue forecast. Its strong balance sheet – net cash of 90sen/sh - should provide the support to its share price.

High material & operating costs affected bottomline

3QFY23 headline net profit was MYR3.7m (losses in 1Q/2QFY23), bringing 9M to MYR2.1m. 3Q construction revenue was down 14% YoY (-4% QoQ) as several projects reached near completion stage. 3Q construction losses narrowed QoQ to MYR0.5m (from the MY projects; SG jobs were profitable) as margins remained affected by high material costs, low productivity and liquidated damages for late delivery. Over at manufacturing, 3Q profit was lower YoY on higher material and operating costs. An interim 2sen DPS (a surprise to us) was declared (vs. 4sen last year), to be paid on 5 Jul.

Subdued outlook affected by multiple factors

In MY, the group is “still struggling” to complete the projects secured pre upliftment of the pandemic restrictions. These projects are very much under-priced. New projects are difficult to secure as tender prices are very competitive. There are also fewer jobs as developers have slowed launches. In SG, jobs are also fewer and the group looks forward to the new T5 at Changi and casinos expansion for orderbook replenishment. Outstanding orderbook was MYR282m end-Mar 2023 (MYR275m end-2022).

Maintaining earnings forecasts

We maintain our FY23/24/25E earnings, expecting subdued profits ahead. Positively, balance sheet remains strong with a net cash (+ financial assets) of MYR149m (90sen/shr) as at 31 Mar 2023 (MYR153m end-2022).

Source: Maybank Research - 29 May 2023