D/G to HOLD; TP unchanged

PINT’s MYR5m after tax loss in 2QFY24 was unexpected, dragged by a MYR8m provision for liquidated damages for late delivery of its MY projects. We now expect losses in FY24 but maintain our FY25/FY26 net profit forecasts. Our TP is unchanged at MYR1.70 based on 0.7x FY24E P/B, its -1.5SD of LT mean (also its low in early-2012). With potential total return (plus div yield) zerorised, we D/G our call to HOLD.

Losses grew at construction ops

MYR5m loss in 2Q led 1HFY24 to an after tax loss of MYR4m. 2Q construction revenue fell 16% QoQ, and the ops posted a higher loss of MYR7m in 2Q (vs. MYR1m loss in 1Q) due to a MYR8m provision for liquidated damages for late delivery. 1H construction revenue fell a sharper 32% YoY due to reduced construction activities and more competitive rates for the new projects. A MYR9m provision for liquidated damages in 1H led to a MYR9m pretax loss at the construction ops in 1H. Losses at the MY construction ops exceeded profits in the SG ops in 1H.

A very tough FY24E

Outstanding orderbook was MYR300m as of end-Dec 2023 (vs. MYR230m Jun 2023), which implies MYR180m new jobs in 1HFY24, based on our estimates. Management expects the MY construction sector to be supported by private sector jobs in the near term as public sector jobs remain sluggish. It is however, more optimistic for jobs in SG from both the public and private sectors and will remain active in the tender space. Overall, management expects a very tough FY24 for the group.

Cutting FY24 forecast

We have incorporated 2Q earnings shortfall and now expect a MYR1m loss in FY24E (we have assumed no further provision for liquidated damages in 2H). Our forecasts have imputed MYR300m job wins (unchanged) in FY24E. Elsewhere, balance sheet remains healthy, in a net cash of MYR120m (72sen/shr) end-Dec 2023. [Prior:BUY]

Source: Maybank Research - 23 Feb 2024