Prestariang’s  MYR19.0m  1H13  core  earnings  were  within  our expectations,  ie  42.0%  of  our  FY13  forecasts.  Management  declared  a 3.0  sen  second  interim  DPS,  bringing  YTD  DPS  to  5.5  sen,  implying  a 63.6%  payout  ratio.  Maintain  BUY,  with  FV  unchanged  at  MYR2.70, based  on  12.0x  FY14F  P/E,  as  we  anticipate  a  slew  of  upcoming  oil  & gas (O&G)-related contracts to catalyse a re-rating of its shares.

- Healthy numbers. Prestariang’s 1H13 revenue improved to MYR53.4m (+5.8%  y-o-y),  which  we  attribute  to  its  ICT  training  and  certification division,  whose  contribution  surged  81%  y-o-y  to  MYR31.3m. Correspondingly,  its  core  earnings  amounted  to  MYR19.0m  (+14.1%  y-o-y),  which  we  deem  in  line.  It  also  accounts  for  42.0%  of  our expectations  and  we  expect  to  see  a  stronger  2H,  as  it  is  historically  a stronger  season.  On  a  quarterly  basis,  Prestariang’s MYR27.2m 2Q13 revenue  rise  (+4.0%  y-o-y;  +16.1%  q-o-q)  was  mainly  on  higher contribution  from  its  software  licence  distribution  and  management segment.  Meanwhile,  its  2Q13  earnings  increased  to  MYR10.0m (+15.8%  y-o-y;  11.3%  q-o-q) owing  to  the growth  in  its software  licence distribution and management business (especially in the O&G sector).

- Generous  payout.  Prestariang  has  declared  its  second  interim  DPS of 3.0  sen,  which  brings  its  YTD  DPS  to  5.5  sen,  translating  to  a  payout ratio  of  63.6%.  We  expect  the  company  to  payout  another  5.5  sen  for FY13  and  12.0  sen  for  FY14,  representing  an  attractive  yield  of  6-7% over the next two years.  

- More  O&G  related  contracts.  Prestariang  has  also  indicated  that  it  is working  with  software  multinational  Autodesk  to secure a  major  training contract with one of the country’s biggest O&G players. We understand that the contract value is around MYR15-20m which could potentially be finalised in the coming weeks.  

- Maintain BUY. With that in mind, we continue to like Prestariang, given that  more  O&G  industry-related  contracts  will  be  coming  on  board  and for its attractive dividend yield of 6-7% over the next two years. With that, we  maintain  our  BUY  call  with  our  FV  of  MYR2.70  based  on  a unchanged 12.0x FY14F P/E. 

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Source: RHB