Pestech  has  won  a  MYR48.3m  job  from  SEB  to  build  a  132/33/11kV substation  in  Kuching.   We  make  no  changes  to  our orderbook replenishment  assumption  but  we  have  made  slight  adjustments  on profit  recognitions  for  FY15-16F  higher  by  3-4%.   We  are  maintaining our  NEUTRAL  stance  on  Pestech  with  a  higher  TP  of  MYR4.51  (8.0% downside), pegged to a CY15F P/E of 17x.

Secured MYR48.4m contract. Pestech International’s (Pestech) whollyowned  subsidiary,  Pestech  SB,  has  secured  a  MYR48.4m  job  from Sarawak  Energy  Bhd  (SEB)  for  Samajaya  132/33/11kV  substation project in Kuching, Sarawak.  The project, which will be commenced on 6  Mar  2015,  is  expected  by  management  to  be  completed  within  18 months.

Potentially  to  win  more  projects  from  SEB.  Currently,  Pestech  still has  two  on-going  projects  (Mapai  and  Mambong  projects)  that  were awarded  by  SEB  in  Oct  2013  and  Jan  2014  respectively.  We  expect Pestech to potentially win more projects from SEB as it plays a vital role in  supporting  the  Sarawak  Corridor  of  Renewable  Energy  (SCORE) developments.

Maintain NEUTRAL with an unchanged TP of MYR4.51.  We make no changes to  our  orderbook  replenishment  assumption  of  MYR330m  but we  have  make  slight  adjustments  on  FY15-16F  earnings  forecasts higher  by  3-4%  after  adjusting profit recognition for the aforementioned periods.  We  are  maintaining  our  NEUTRAL  stance  on  Pestech  with  ahigher TP of MYR4.51 (8.0% downside), pegged to a CY15F P/E of 17x. The higher P/E is justifiable with a low 3-year average PEG of 0.42x. The company had a net gearing ratio of 0.62x as at end-Dec 2014.