We expect Prestariang’s 2Q15 core earnings (to be released on 19 Aug)to come in at MYR8m-12m with a second interim DPS of 1.0-1.5 sen to be declared. Keep BUY with our TP fine-tuned to MYR3.00 (25% upside, from MYR3.03). We continue to believe that FY15 earnings will likely close at a new high, underpinned by contributions from its Microsoft contract and the recent renewal of previously expired contracts.

Results preview. Prestariang is set to release its 2Q15 results on 19 Aug. We believe core earnings would come within MYR8m-12m, up from 1Q15’s MYR4m, driven by its Microsoft contract, which has anoutstanding orderbook of MYR87m as at end-March. On top of that, we expect contributions from its previously expired contracts, although earnings accretion from these contract renewals will likely be more profound in 2H15. Notably, the 3P industry-based certification programme and IC Citizen certification programme re-commenced in May and June respectively, while the group has also clinched the renewal for its Managing University Software as an Enterprise (MUSE) programme for a period of two years commencing Jul 2015 at total sum of MYR20m. On a side note, we gathered that enrolments for its university are gradually picking up pace. We continue to expect the institution to break even by end-2015, leveraging on its proposed tie-up with Majlis Amanah Rakyat.

PISA project around the corner. The group is looking to roll out its accelerated training course for the Programme for International Student Assessment (PISA) by 4Q15 based on our channel checks. While the recent split of the Ministry of Education and Higher Education following the recent cabinet reshuffling could lengthen negotiations, we remainhopeful that the Government would firm this up in due course to address Malaysian students’ subpar performance in international examinations.

Partnership with Unisys. While management remains tight-lipped on its recent tie-up with Unisys (UIS US, NR), we believe this partnership is intended to bid for new IT-related jobs to help expand the group’srecurring earnings base. This could propel earnings growth in the long run and hence help to further re-rate its share price.

Maintain BUY. We updated our model for housekeeping purposesfollowing the release of its 2014 annual report. As a result, our FY15-17F EPS are trimmed by 0.8-1.0%. As such, we revise our TP to MYR3.00 based on an unchanged 20x 2016 P/E. Given the appealing upside of over 25%, we are maintaining our BUY call.