Third Job Win in 2018

Intrasegi Sdn Bhd – Pesona Metro Sdn Bhd JV has accepted a construction job from Pembinaan Kery Sdn Bhd, for the construction and completion of superstructure works for a block of 41-storey mixed commercial tower, external works, associated works and ancillary buildings. Pesona Metro Sdn Bhd is a wholly owned subsidiary of Pesona Metro Holdings Berhad.

The contract sum is RM218.2mn. Expected to commence on 1 September 2018, the project is to be completed within a construction period of 26 months.

Our View

This is the group’s third job win in 2018, after securing a serviced apartment project in Subang Jaya and affordable housing project in Bukit Jalil with contract sums of RM161.8mn and RM216.4mn respectively. With this job win, the outstanding order book is estimated at RM1.7bn, translating into about 3.1x FY17 construction revenue.

Pesona Metro’s effective stake in the JV was not disclosed. Assuming Pesona Metro having a 70% stake in the JV, and with a net margin of 5%, we estimate the project to contribute to net profit of some RM7.6mn, or EPS of 1.1sen throughout the construction period.

Impact

No change to our FY18 to FY20 earnings forecasts as the job win is within our FY18 order book replenishment assumption of RM600mn.

Valuation

Maintain our target price at RM0.29, based on sum-of-parts valuation. Downgrade the stock from HOLD to SELL on valuation ground.

Source: TA Research - 20 Aug 2018