• Maintain BUY, with new MYR2.09 TP from MYR2.06, 23% upside. Pintaras Jaya’s 9MFY24 (Jun) core earnings of MYR6.9m beat ours and Street’s estimates – making up 93% and 142% of full-year projections. We expect an increase in job opportunities from Singapore, with forecasted public sector construction demand ranging from SGD18-21bn. Given the anticipated construction sector upturn in 2024, PINT’s valuation appears attractive, trading at 0.7x FY25F P/BV (-1SD from the 5-year mean).

• Results review. 9MFY24 core net profit surged >100% YoY to MYR6.9m – largely driven by reduced cost pressures from previously loss-making projects secured before the Russia-Ukraine conflict, as they are now nearing completion. This offset a 16.6% YoY revenue decline due to decreased construction activities, as many projects (particularly in Singapore) were at the tail-end, and new contracts were secured at competitive rates. PINT’s manufacturing segment posted a 9MFY24 EBIT of MYR5.7m (+86% YoY), with margin improving to 14.6% from 9% in 9MFY23, mainly due to increased demand and improved cost efficiency from economies of scale.

• PINT’s outstanding orderbook stood at MYR316m as at end-3QFY24 (c.1x cover ratio) vs MYR282m a year ago. Its estimated YTD new job wins are worth MYR330m, including a mix of railway-related and Housing & Development Board (HDB) projects in Singapore. Looking ahead, we expect better job flows from Singapore as the rollout of public sector projects accelerates, supported by a tenderbook of more than SGD1bn. Major upcoming projects for CY24/CY25 include new HDB developments, the Cross Island Mass Rapid Transit Line (Phase 2), Changi Airport's Terminal 5, and the Tuas Port development.

• Additionally, the ongoing US-China tension may attract more tech giants to expand in Singapore, potentially benefitting PINT due to its experience in completing two semiconductor fabrication factories. With a strong track record in Singapore, PINT is at a sweet spot to capitalise on the expected construction sector upturn in 2024-2025.

• We lift our FY24F-26F earnings by 10.4-14.8% after adjusting our margin assumptions upward but lowering revenue as we dial down progress billing to be more conservative. Consequently, we derive a new MYR2.09 TP pegged to an unchanged 0.9x FY25F P/BV, with a 4% ESG discount baked in. The target P/BV is justified on account of the potential benefit from Singapore’s construction sector growth, which saw its GDP expand by 5.2% in 2023 (2022: 4.6%). A re-rating catalyst for PINT would be the securing of sizeable construction projects in Malaysia, as the bulk of the orderbook comprises Singapore jobs. Downside risks include slower-than-expected job replenishments and project delays.

Source: RHB Research - 21 May 2024