Second Job Win in 2018

Pesona Metro has accepted a construction job from Gaya Kuasa Sdn Bhd for an affordable housing project in Bukit Jalil. The housing project comprises 2 blocks of 42-storey residential units, and 1 block of 8-storey car park. The scopes of works include construction of main building, mechanical and electrical services, external works, landscape and ancillary works. The project has a contract sum of RM216.4mn, with a project duration of 32 months, commencing 1 July 2018. As the project is deemed to be a recurrent related party transaction, PESONA will be seeking its shareholders’ approval at the upcoming AGM.

Our View

This is the group’s second job win in 2018, bringing the YTD construction job wins to RM378.2mn. With this job win, we estimate the outstanding order book improve to RM1.8bn, translating to some 3.4x FY17 construction revenue. Assuming a net margin of 5%, we estimate the project to contribute to net profit of RM10.8mn, or EPS of 1.6sen throughout the construction period.

Impact

Maintain our FY18 order book replenishment assumption of RM500mn. We perform house-keeping to our earnings model and adjust our earnings forecasts for FY18/FY19/FY20 by -2.9%/2.2%/3.5% respectively.

Valuation

We tweak our target price slightly lower to RM0.45. Maintain BUY on the stock.

Source: TA Research - 26 Mar 2018