Pestech has won a MYR28.8m job from NUR to build a 132kV substation in Kulim. We are maintaining our NEUTRAL stance on Pestech with an unchanged TP of MYR4.36 (3.5% downside), pegged to a CY15F P/E of 17x. The higher P/E is justifiable with a low 3-year average PEG of 0.44x.We make no changes to  our earnings forecasts as we have factored in an orderbook assumption of MYR330m.

Secured MYR28.8m contract. Pestech International’s (Pestech) whollyowned  subsidiary,  Pestech  SB,  has  secured  a  MYR28.8m  job  from N.U.R.  Distribution  SB  (NUR)  for  the  engineering,  procurement  and construction,  commissioning  and  testing  work  package  of  the  West 132kV  substation  project  in  Kulim,  Kedah.  The  project,  which commenced  on  23  Feb  2015,  is  expected  by  management  to  be completed within 15 months.

Brief background of NUR.  NUR operates an independent power utility within  the  Kulim  Hi-Tech  Park  (KHTP)  in  Kedah.  It  generates  and distributes  electricity  to  multinational  tenants  in  the  1,700  ha  industrial park. NUR is a new private utility client to Pestech.

Maintain  NEUTRAL with an unchanged  TP of MYR4.36. We make no changes  to  our  earnings  forecasts  as we  have  previously  factored  in orderbook replenishment assumption of MYR330m.  We are maintaining our  NEUTRAL  stance  on  Pestech  with  an  unchanged  TP  of  MYR4.36 (3.5%  downside),  pegged  to  a  CY15F  P/E  of  17x.  The  higher  P/E  is justifiable with a low 3-year average PEG of 0.44x. The company had a net gearing ratio of 0.62x as at end-Dec 2014. Its orderbook remained strong at c.MYR508m as at 24 Feb 2015.

Source: RHB