Our meeting  with Prestariang (PRES)  reaffirmed the company’s robust prospects.  We expect no major surprises from its 9MFY13 results  due for  release  on  20  Nov  and  remain  positive  on  its  recently  announced M&A  venture.  Maintain  BUY,  with  our  FV  pushed  up  to  MYR3.37  (vs MYR2.70)  based on higher 15.0x  FY14  P/E  as we expect a slew of O&Grelated training contracts to propel the share price to new highs.

• Sturdy  9MFY13  numbers  expected.  Prestariang  is  set  to  release  its 9MFY13 results on 20 Nov.  We foresee no major surprises  and expect the company’s 9MFY13 net profit to come largely in line with our full-year forecast of MYR45.3m  as we gather  that  it is  business as usual  at the company’s  core  ICT  training  and  certification  as  well  as  software licensing  distribution  division.  Meanwhile,  we  expect  to  more  new developments  relating  to  its  O&G  division  in  the  company’s  upcoming results briefing on 21 Nov.
• Generous  dividend  payout  likely.  We  expect  PRES  to  announce  a third interim  dividend per share (DPS)  of 3.5 sen for 3QFY13.  Hence, its full year payout would come to a DPS of 11.0 sen for FY13 and 12.0 sen for FY14. This will translate into a lucrative annual yield of around 5%.
• Sizzling  prospects  in  O&G.  on  another  matter,  PRES  announced yesterday  that  its  wholly  owned  subsidiary,  Prestariang  O&G  SB,  has proposed to acquire an 80% equity stake in Time Out Skills Academy SB (TOS)  for  a  total  consideration  of  MYR640k.  it  has,  at  the  same  time, secured  a  contract  worth  MYR2.2m  to  implement  the  Peneraju  Tunas Iltizam  programme  for  240  students  over  a  period  of  two  years.  We believe  this  job  is  the  company’s  third  involving  the  provision  of  O&G training and certification for the O&G industry.  
• Maintain BUY. All said, we maintain our BUY call, and nudge up  our FV to  MYR3.37  from  MYR2.70  previously,  based  on  a  higher  15.0x  (from 12.0x) FY14 P/E  as we expect  the company to secure  a slew of O&G training-related contracts in the near term to  propel its share price to new heights.

Corporate Highlights
Sturdy  9MFY13  numbers  expected.  We  expect  no  major  surprises  from Prestariang’s  upcoming  9MFY13  results,  due  for  release  on  20  Nov.  We  see  no major surprises and expect the 9MFY13 results to be in line with our full-year forecast of  MYR45.3m.  This  is  because  we  gather  that  business  is  running  as  usual  at  its existing core ICT training and certification as well as software licensing distribution arms.  Meanwhile,  we  expect  to  more  developments  relating  to  its  O&G  division  at PRES’ upcoming results briefing on 21 Nov.

Generous dividend payout likely.  We expect PRES to pay out a third interim DPS of 3.5 sen for 3QFY13 given its asset light business model as well as strong net cash position of MYR34.8m as of 2QFY13. We continue to anticipate a DPS of  11.0 sen for  this  year  and  12.0  sen  for  FY14,  which  will  translate  into  a  lucrative  yield  of around 5% per annum over the next two years.

New  O&G  training  academy.  Meanwhile,  PRES  announced  that  its  wholly-owned subsidiary,  Prestariang  O&G  SB,  has  entered  into  a  sales  and  purchase  share agreement to acquire 80% equity in Time Out Skills Academy SB (TOS), which would later  be  renamed  Prestariang  Academy  SB,  for  a  total  consideration  of  MYR640k. TOS is involved in the business of training and conducting technical skills courses for professionals and providing management consultancy services for the O&G sector. Overall, we are positive on PRES’ move to  acquire  the academy for its O&G course materials  so  that  it  can  immediately  begin  to  roll  out  skills  certification  training programmes  for  young recruits in areas such as welding, scaffolding, pipefitting and fabrication  in  the  O&G  industry.  We  understand  that  the  acquisition  will  be  fully funded  via  cash.  As  of  2QFY13,  PRES  was  sitting  on  a  comfortable  net  cash  of MYR34.8m.

Another contract in the bag. The acquisition coincides with PRES being awarded a letter of award from Yayasan Peneraju Pendidikan Bumipetera (YPPB)  to implement the Peneraju Tunas Iltizam  programme, which we  believe  would likely be conducted entirely under TOS.  Under this programme, the company will provide skills training certification for riggers, scaffolders and pipefitters  involving  240 students for a period of two years. The  total contract sum  is  MYR2.2m.  Although the contract  is  relatively small, it  solidifies  PRES’ position in the O&G industry. Hence we  expect more O&Grelated contracts to come on board.

Maintain  BUY.  Although  PRES’  share  price  has  run  up  by  some  22.0%  since October,  we believe a re-rating is in store  given that  the M&A has been  announced and management has indicated  that it has secure  more  potential  contracts in O&Grelated  training  and  certification  contracts  in  the  pipeline.  Given  its  undemanding valuations  against  its  education  peers,  we  are  lifting  our  FV  to  MYR3.37  (from MYR2.70),  based on a higher  15.0x (from 12.0x)  FY14 P/E.  PRES remains our Top Pick as well as the cheapest proxy to the education sector. Maintain BUY.

Financial Exhibits

SWOT Analysis

Company Profile
Prestariang  provides  ICT  services  focused  on  professional  training  and  certification  with  industry  partners  such  as  Microsoft ,  IBM, Oracle and Autodesk

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