http://cgmalaysia.blogspot.sg/2013/10/protasco-deposit-is-topped-up.html

Penangblu, don't think current price account for oil & gas.

Prtoasco allocates RM50m to buy land
http://www.thesundaily.my/news/843784

I'm out at the moment. Poor indo market and rupiah sentiment will likely affect prospects of indo purchase, govt tightening measures on property will affect property segment, weakening bursa sentiment and ringgit may mean another selldown. Chart wise uptrend seems to have broken and turned down. Not looking good at the moment.

Yes. Worrying purchase. Impairment loss of 20 million would be substantial, about rm 0.06 per share. Assuming that the value doesn't drop further.

Foreign ownership comprises less than 1% of total shareholding and this stock comprises of majority shareholder so unless they sell too I think the 1.30-1.35 may hold.

Keep in mind that when Protasco IPO a years ago it was 1.80. Today it's better than before and it's only 1.50. So clearly there's room for upside.

Can any kind soul pls share the report? I'm sure it will be useful in generating more interest in the company.

Where can we find research by RHB? Is market open tomorrow?

Fong si ling just bought or she buy long ago?

RM1.40 done.

Who is fong si ling

Nice...Looks like Protasco is getting more analysts coverage.

Who wrote the report?

I think the price would be reasonable but I'm not sure about the reasonableness of the intrinsic value. Perhaps we can use apply a discount rate to the yearly profits (assuming they eventually translate into cash) under a discounted cash flow model.

Okay. So just the value for this year would be to add 44sen. Is that right?

Property: Gross Development Value as mentioned by Datuk Chong is RM 6.6 billion. Typical net profit margin for Property Companies is 20% i.e. Net Profit attributable to equity holders = 20% x RM 6.6 billion = RM 1.32 billion.

No. of shares outstanding approx. 300 million.

Net Profit attributable to equity holders = RM 1.32 billion / 300 million = RM 4.4. (over the life of the project)


Oil & Gas: There is a profit guarantee of US$ 50 million (RM 150 million) over 3 years from the counter-party which stipulates that the vendor will make up for any shortfall. We could assume (unless the vendor defaults) that RM 150 million of profit would be attributable to equity holders over 3 years. Again, given about 300 million shares outstanding, this segment would be valued minimally at RM 0.50.

Hope it clarifies. Feel free to critique.

Construction：Average PE = 11. Protasco Latest FY EPS = RM 0.12 Assuming Protasco moves to average PE of 11x = RM 1.33.
I believe Protasco is worth more than 11x PE with its long term recurring income from long term govt contracts.

Property: Protasco holds land with GDV worth RM 6.6 billion. Assume conservative property net margin after development of 20%, property segment is potentially worth RM 1.32 billion or about RM 4.4.

Oil and Gas: Profit guarantee of US$ 50 million or RM 150 million, translating into minimal profit/equity of RM 0.50

Construction + Property = RM 1.33 + RM 4.4 = RM 5.73

Construction + Property + Oil & Gas = RM 5.73 + Rm 0.5 = RM 6.23

It looks far-fetched. You can apply a discount however you want it but at the current price, seems like market is only valuing the company for its construction and engineering service.

Cheers.

Gross margin for Construction projects are typically 15% of revenue for Protasco. This should translate to RM3.45 million in gross profit.

Protasco Berhad is pleased to announce that its subsidiary, HCM Engineering Sdn Bhd, had been awarded by Jabatan Kerja Raya (Public Works Department), periodic maintenance works on Federal Roads in Zone 2A, Sarawak for a total contract sum of RM23 million.

The works are to be completed by end of 2013 and expected to contribute positively towards the Group’s results for the financial year ending 31 December 2013.

The shares disposed today is negligible

When Protasco IPO a few years ago, the price was RM 1.20 and even went up to RM 1.80. Today Protasco is in a far better financial position, performs better and paid out more dividends every year than when it IPO, yet the price is still RM 1.20, you be the judge if the price is cheap now.

Sent to ur email, Ryan

Pleasure to share my thoughts with everyone, Gordan.

To the rest, the latest report I have is the one published in May, if you haven't already received a copy of it.

Thanks.

Okay, sent to your emails.

sephiroth and wtclau, its the same report I sent earlier on. Have you not received it?

Ariff, sent to your email

Since when is there proper governance and transparency in Malaysia...

Hi. There are 2 reasons for the general downward market trend.

1.) Foreign funds pulling out of emerging markets due to the strengthening of the US dollar and the unwinding of the US dollar carry trade - a result of expectations of Fed tapering the stimulus.

2.) Tightening of credit in China which results in expectations of a slowdown in growth of China, which could possibly affect the rest of Asia and the global economy.

In response to 1.), the majority of the shareholders are the domestic shareholders (Up to 96.78%). We therefore expect any selling from 1.) to be extremely limited, in light of the pull-out of foreign funds. Public shareholding spread of the Company is 44.30%. Assuming that the substantial shareholders do not liquidate their holdings (which is a reasonable assumption given prospects of company), any selling would be further limited.

In response to 2.), we can expect counters with exposure to China directly/indirectly to be affected. Protasco derives its earnings from infrastructure development in Malaysia and possibly Libya in the near future. It's earnings are independent of economic situation in China, USA, EU or any other countries. It is also for this reason that any impact on Protasco's earnings from the financial crisis in 2008-09 were limited. Perhaps earnings from property development may be affected but Malaysia is currently experiencing a boom in property after the elections, which bode well for the company. The Malaysian government has also planned to increase infrastructure spending under the 10th Malaysian Plan as evidenced by increased public borrowing by the Malaysian government.

Conclusion: Despite strong fundamentals, share price can still tank as we have seen from 2008-09 where earnings were relatively stable and dividend payouts were high and consistent. In that period, Protasco fell by more than 50% to RM 0.60. If I had researched on Protasco during that period, I would certainly have swept up the shares. However, the current situation is nothing like 2008-09 and I would expect earnings to strengthen year-on-year given recent developments for Protasco. I cannot say for certain if the price will hit RM 1.15 but I am optimistic about the prospects of Protasco and would not sell out at this point in time.

To Caiyi: To ans your question, I would buy at 1.16 if it ever reaches that price but that's just me. I wouldn't want to be responsible for your gains or losses so it would be ideal if you could do some research and make an informed and independent decision.

Protasco Bhd (Not rated, TP: 1.31)

JF Apex Securities Bhd in its "Trading Idea" investment research report has placed a RM1.31 target price on Protasco Bhd -- a road construction company.

"Protasco is an under-researched and low profile small-cap contractor which has not attracted much investor attention. The lack of investor interest on the stock is due to the fact that the Group has not been involved in much construction works especially on the high-profile mega projects which were awarded in the past few years although the Group is consistently rewarding shareholders with decent dividend yield of over 6 per cent.

"However, we reckon that market perception on the stock could be changed as Protasco is riding on the current property boom, banking on its project in Kajang, the next hotspot since MRT was announced, and its maiden venture into Oil & Gas segment," said JF Apex Securities.

Protasco currently has an outstanding order book of over RM1.7 billion, comprising five road maintenance jobs that will last the company until 2016-2019 -- thus guaranteeing recurring income of some RM350 million a year.

"Our fair value for Protasco is RM1.31, pegged at 10.5x FY2014F PE, which is in line with our mid-to-upcycle valuation for small-cap construction stocks under coverage. Our target price indicates an upside of 13 per cent against the closing price of RM1.17, together with the estimated dividend yield of 7 per cent, bringing the potential upside close to 20 per cent.

"We favour the stock for its: 1) strategically located property project in Kajang; 2) attractive dividend yields of close to 7%; 3) consistent recurring income with road maintenance concessions; and 4) further diversification into the burgeoning O&G sector," it said in its report on June 14.


Read more at: http://english.astroawani.com/news/show/stock-ideas-astro-malaysia-genting-malaysia-protasco-drb-hicom-16473?cp

English pls

Given that first phase is completely sold, that should contribute to earnings this year. Hopefully the the earnings would have converted into cash flow to be distributed.

Yes good stable recurring income from road maintenance and construction for dividend payout. Income from property and oil & gas should provide additional income for more payouts

Hopefully soon.

Haha ok. thanks for sharing.

I don't know malay.

What is cacat?

cherry tomato, Rome is not built in a day. Besides, it was 1.07 before the dividend was announced.

Sent.

Sent. Let me know if you haven't received it.

We have director purchasing another 4 million shares at RM1.20, which should set a benchmark.

May take some time to recover. Heavy selling on Thursday. Buyers from 1.17 to 1.24 facing losses may be inclined to sell. May drop further so can wait awhile for lower prices to buy.

According to Dato Chong, Oil and Gas is not an entirely new business for the company because Protasco has experience in drilling so they are making use of existing expertise in the venture.

arv18, I agree with you on this that the above isn't the best arrangement. In fact, the stock isn't very liquid and could potentially fall in value very quickly in a selldown. Coupled by the fact that it is trading at a historical high...

Holding the stock in a trust would only eliminate counterparty risk but not market and exchange rate risk though. The ideal scenario would be for the cash to be held in a trust.

I'm going with my gut feeling that management is acting in the best interests of the the company on this issue...

Including sharebuy backs, Protasco would have paid out 8 sen in total YTD.

Final dividend of 4 sen announced

Acquisition not confirmed until due diligence report is out. No go if development rights of PT Haseba cannot be extended by another 10 years.

With regards to the collateral, the shares were worth RM 55,038,167 as of 6 May 2013 at a conversion rate of 1MYR = 3273.80 IDR.

darecom, the report has been sent to ur email. Let me know if you haven't received it. Thanks!

These news have been out for awhile. I don't think many people notice it. While we are uncertain about the venture into the oil & gas business, property business has been successful so far.

I would value the company partially as property as Dato Chong said he expects property profits to contribute 40% of total profits. At the current price, it seems like Protasco is valued only as a pure play road construction and maintenance company. There's more room for appreciation.

Androsyj, the report has been sent to ur account. Let me know if you don't receive it.