• 1HFY19 earnings accounted for 58% of our full-year forecast
• Maintaining our earnings forecasts for now, pending an update by management
• Maintain HOLD with RM5.00 TP

What’s New

Profit trumps expectations, driven by higher revenue and margin recovery. Perstima’s 2QFY19 earnings rose sharply yo-y to RM12.2m (+248% y-o-y, +0.8% q-o-q). The strong earnings growth compared with the corresponding period last year was driven by stronger revenue (+15.9% y-o-y) and recovery in its gross profit margin (2QFY19: 6.5% vs 2QFY18: 3.4%). Its 1HFY19 earnings came in at RM24.3m accounting for 58.3% of our full-year earnings estimate, which we deem to be above expectations.

Still anticipating a changing environment. In the note accompanying its quarterly results announcements, the group has highlighted its expectations for the operating environment to remain challenging and competitive. Furthermore, uncertainties arising from the ringgit’s volatility against USD will affect the growth and profitability of the group.

Keeping our earnings forecasts, pending a management update. We are keeping our earnings forecasts for now, pending an update by management.

Maintain HOLD with RM5.00 TP. Pending an update by management, we are maintaining our HOLD recommendation and TP of RM5.00, pegged to a forward PE of 12x.

Source: Alliance Research - 1 Nov 2018