“Q4 revenue – within expectations”

For 4Q/FY16 (quarter ended 31st December 2016), PRG’s revenue of RM35.1million was generally within our earlier expectations. However, the group recorded net losses after tax and minority interest (NLATMI) of RM2.1million. PRG’s 4Q/FY16 revenue and NLATMI were both worse y-o-y versus the corresponding 4Q/FY15 figures.

“Mixed performance”

Group revenue was boosted by a positive performance from its longrunning Manufacturing Division, which enjoyed higher sales volumes. However, revenue from its relatively new Property Development & Construction Division were lower during the quarter, whereby profit recognition from the Picasso Residence property development project is growing but still small (given the early stage of construction), and a construction project was completed by the group.

“Higher corporate & marketing expenses”

Margins and earnings were impacted by corporate expenses for its proposed Hong Kong listing for its manufacturing division, and also marketing and selling expenses for its Picasso Residence in Kuala Lumpur. Comparing q-o-q versus the preceding 3Q/FY16, PRG’s revenue was slightly higher, but its net earnings turned into net losses. As mentioned above, margins and earnings were impacted by corporate expenses for its proposed Hong Kong listing and also marketing and selling expenses for its Picasso Residence in Kuala Lumpur.

RECOMMENDATION

Based on our forecast of PRG’s FY17 Book Value/Share and an estimated P/BV of 2.2 times, we set a FY17-end Target Price (TP) of RM0.945 (representing a Hold / Market Perform Call), which is approximately 7.4% higher than the market price on the date of this report. Our TP for PRG reflects a P/E of 51.4 times over its FY17F Earnings /Share

Source: Mercury Research - 1 Mar 2017