First Job Win Since Nov 2016

Pesona Metro has accepted a construction job from Sime Darby Property (Subang) Sdn Bhd for a proposed development of 30-storey serviced apartments. The development comprises 2 blocks of 20-storey residential towers, 1 level of facilities, 3 levels of commercial units, 9 levels of elevated carpark and 1 level of basement carpark on Lot 15, Jalan Kemajuan Subang SS16, Subang Jaya, Selangor Darul Ehsan.

The project has a contract sum of RM161.8mn, with a project duration of 39 months, commencing 30 January 2018.

Our View

This is the group’s first job win since Nov 2016. With this contract, we estimate Pesona Metro’s outstanding order book would improve to RM1.6bn, translating to about 4.1x FY16 construction revenue.

Assuming a net margin of 5%, we estimate the project to contribute net profit of RM8.1mn, or EPS of 1.2sen throughout the construction period.

Impact

Maintain FY17 to FY19 earnings forecasts as the construction award is within our FY18 order book replenishment assumption of RM500mn.

Valuation

Reiterate BUY on the stock with an unchanged target price of RM0.55.

Source: TA Research - 29 Jan 2018