Fourth Job Win in 2018

PESONA has accepted a construction job from Indo Aman Bina Sdn Bhd, a subsidiary of TA Global Berhad, for the construction and completion of main building and external works for 2 blocks of serviced apartment.

The project has a contract sum of RM264.3mn and the works involve the construction of a 33-storey and 28-storey serviced apartment blocks, with a 10-storey podium and 4 levels of basement car park.

The project is to be completed within 32 months, commencing on 15 August 2018 and ending on 14 April 2021.

Our View

This is the group’s 4th job win in 2018, as well as 4th building job in a row, bringing the YTD job win to RM861mn. With this job win, the outstanding order book is estimated at RM1.8bn, translating into about 3.4x FY17 construction revenue.

Assuming a net margin of 5%, we estimate the project to contribute a net profit of RM13.2mn, or EPS of 1.9sen throughout the construction period.

Impact

We raised our FY18 order book replenishment assumption to RM1.0bn as this job win has exceeded our previous FY18 order book replenishment assumption of RM600mn. Accordingly, we raise FY19 and FY20 earnings forecasts by 21.1% and 24% respectively.

Valuation

We raise the target price from RM0.28 to RM0.33, based on sum-of-parts valuation. Maintain SELL on the stock on valuation grounds.

Source: TA Research - 5 Sept 2018