At below-average in our ESG score

We extend our review of Pintaras’ ESG matters; our first review (page 3; updated in this report) was in Sep 2022. As per our latest ESG assessment (page 4), Pintaras is short of a frame-work and tangible mid/long-term targets, and disclosures on matters relating to Environmental and Social. Its overall ESG score – under our proprietary ESG scoring methodology - is 20 (out of 100), which makes its ESG rating below-average, in our view.

Shortfalls on qualitative/quantitative parameters

From our review of Pintaras’ FY23 Annual & Corporate Governance Report, Pintaras lacks disclosure on key “E” and “G” parameters like carbon emissions & intensity, renewable energy use, volume of water/waste recycled; and detailed quantification on employees training and corporate philanthropy contribution although it mentioned these efforts in its Annual Report. Positively, we notice efforts in expanding its board-room gender diversity with women directors making up 43% in FY23, from 14% in FY21.

Positively, there are efforts in reducing waste

Positively too, Pintaras outlines its targets in waste reduction every year. It sets theoretical percentage of tolerable wastage for every construction project, record the actual wastage, and then investigate and mitigate the deviations. In FY23, the average wastage of steel bars was 7-8% (FY22: 4- 6%), ready-mixed concrete 5-18% (FY22: 5-16%), and tin plates 21% (FY22: 22%). This compares against its targets for FY23 – steel bars of 5-7%, ready- mix concrete for foundation works of <30% and for structural works of 5%.

No change in our forecasts and TP

We expect Pintaras to be in the red in FY24E (1HFY24: MYR4m after tax loss, after a MYR8.8m provision for liquidated damages for late delivery [LAD] for its projects in MY; we have assumed no further provision for LAD in 2H). Our forecasts have imputed MYR300m job wins in FY24E (1HFY24: MYR180m). Elsewhere, balance sheet remains healthy, in a net cash of MYR120m (72sen/shr) end-Dec 2023. Our TP is unchanged at MYR1.70 based on 0.7x FY24E P/B, its -1.5SD of LT mean (also its low in early-2012).

Source: Maybank Research - 29 Mar 2024