Pintaras Jaya bags RM72.8 mil shopping complex job in Shah Alam

Pintaras Jaya Bhd
(Jan 18, RM3.60)
Maintain buy with a higher target price of RM4.08: Last Friday, Pintaras Jaya’s wholly-owned subsidiary, Pintaras Geotechnics Sdn Bhd, received a letter of award from Central Plaza I-City Real Estate Sdn Bhd to undertake piling and basement structural works for a proposed shopping complex in Section 7, Shah Alam, Selangor.

The contract is valued at RM72.8 million and will commence immediately with a completion period of 13 months. We are excited about the latest contract win as it is by far the largest project won this year after a quiet start to FY16. 

Year to date, new contract wins stand at RM121.8 million (RHB’s financial year end 2016 [FY16] estimate: RM250 million). The prospects for the piling segment remain strong, backed by various mega infrastructure projects like mass rapid transit 2 (MRT2) and light rail transit 3 (LRT3) as well as a structural shift towards high-rise developments.

We expect more contract wins by Pintaras Jaya going forward although recently secured contracts would have limited contribution in FY16. Therefore, we cut FY16 earnings estimate by 14.4%, but revise up FY17/FY18 profit forecasts by 3.3%/2.4%. 

Pintaras Jaya’s key strengths are its: i) full range of piling machines, tools and accessories, ii) ability to improvise piling solutions to suit diverse ground conditions given its more than two decades of experience in the local piling sector, and iii) ability to secure cash discounts for key inputs, given its strong balance sheet. 

We value the company at RM4.08, derived from 10 times FY16 price-earnings ratio (PER) (low end of the target PER range of 10 times to 18 times for the construction sector) plus net cash per share as at Sept 30, 2015.

This article first appeared in The Edge Financial Daily, Jan 19, 2016. Tap here to subscribe for your personal copy.