• Still BUY, new MYR1.85 TP (from MYR2.09), 23% upside, c.2% FY25 (Jun) yield. Pintaras Jaya’s FY24 core earnings of MYR2.6m fell short of our and Street’s estimates, at only 30% of full-year projections. We expect job opportunities from Singapore to remain positive, with 2024 public sector construction demand forecasted at SGD18-21bn. Given the better construction prospects in Singapore and lower cost pressures from legacy projects, PINT’s valuation appears undemanding at 0.7x FY25F P/BV (-1SD from the 5-year mean and KLCON index mean).

• Results review. FY24 core net profit surged >100% YoY from a MYR8.8m core loss a year ago, largely driven by reduced cost pressures from previously loss-making projects secured before the Russia-Ukraine conflict, as the projects are nearing completion. This outweighed an 8.5% YoY revenue decline amid fewer construction activities in Malaysia. The manufacturing segment posted FY24 EBIT of MYR8.5m (>100% YoY), with margin improving to 16.2% (FY23: 6.6%) mainly due to higher demand and improved cost efficiencies from economies of scale. A DPS of MYR0.05 was declared.

• Orderbook. End-FY24 outstanding orderbook of MYR240m translates to a 0.8x cover ratio. We gather that PINT has only one outstanding legacy project, which should be completed in the next quarter. Estimated YTD new job wins are worth MYR330m, including a mix of railway-related, private residential, and Housing & Development Board (HDB) projects in Singapore.

• Outlook. We are positive on the robust pipeline of public sector projects in Singapore, with 1HCY24 public sector awards standing at SGD12.5bn (+57% YoY). We do not anticipate any delays, especially with upcoming elections in Singapore (likely in 2025). Major projects slated for CY24-25 include new HDB developments, the Cross Island MRT Line (Phase 3), Changi Airport's Terminal 5, and the Tuas Port development. PINT’s industrial experience (via two semiconductor factories for major companies) enables it to capitalise on spillover benefits from ongoing US-China tensions, which are attracting more tech giants to expand in Singapore.

• Forecasts. As earnings missed expectations, we revised FY25–26 forecasts down by 12.9% and 13.3%. We also introduced FY27F earnings of MYR13m with a MYR400m job replenishment target. As PINT was loss-making and earnings may not fully recover in the upcoming FY, we continue to adopt the P/BV valuation method. Our new TP is pegged to an unchanged 0.9x FY25F P/BV, which bakes in a 4% ESG discount. 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 rerating catalyst for PINT would be the securing of sizeable construction projects in Malaysia, as the bulk of its orderbook comprises Singapore jobs. Risks: Slower-than-expected job replenishments and project delays.

Source: RHB Research - 30 Aug 2024