We  maintain  our  BUY  call,  forecasts  and  MYR7.00  FV  following  the release of Pintaras Jaya’s FY13 results, which beat our forecast by 13%.  Pintaras is the best proxy to Malaysia’s piling sector, which is evolving from  a  cyclical  upturn  to  a  super  cycle  as  the  development  of  large-scale  infrastructure,  property  and  oil  &  gas  projects  in  the  country shifts into higher gear. 
 
- FY13  net  profit  grew  17%.    The  FY13  net  profit  beat  our  forecast  by 13% on higher profits realised from quoted investments.  
 
- In  super  cycle,  best  in  trade  and  in  expansion  mode.  We  like Pintaras as: i) the sector it is in, i.e. local piling, is evolving from a cyclical upturn to a super cycle as the development of mega projects in Malaysia shifts into higher gear over the next six to 12 months. These include the MYR383bn  Iskandar  Malaysia,  MYR60bn  Refinery  and  Petrochemical Integrated Development (Rapid), MYR26bn Tun Razak Exchange (TRX), MYR7bn West Coast Expressway (WCE), ii) Pintaras is the best-in-the-trade in the local market by virtue of the superb margins it has achieved, backed  by  good  piling  rates  on  a  chronic  capacity  shortage  in  the market, iii) the group’s full range of piling machine, tools and accessories (that  reduces  the  need  for  outsourcing)  and  its  in-depth  knowledge  of ground conditions allow it to pick and choose the best jobs to bid for, and putting  in  the  winning  bids  for  them;  and  iv)  backed  by  MYR100m  in capital  expenditure,  it  hopes  to  double  its  outstanding  orderbook  to MYR300m from MYR150m currently.   

- Maintain BUY, MYR7.00 FV.  We value Pintaras at MYR7.00 based on a 10x CY14 EPS of 70 sen, in line with our 1-year forward target P/E of 10-16x for the construction sector.  The group’s balance sheet is strong, with net cash of MYR125.3m - or MYR1.57/share - as at 30 June 2013.  In  addition,  it  had  investment  in  quoted  shares  with  a  market  value  of MYR30.1m, or 38 sen/share, as at 30 June 2013.

Source: RHB