Once again, Protasco was unable to secure any major construction contracts in 2Q2018 as mega-infrastructure and government-related projects were put on hold over the past couple of months. Protasco is tendering for some RM2.00 bln worth of construction projects, including affordable civil servant housings, building and infrastructure projects. Moving forward, Protasco’s outstanding orderbook RM1.06 bln will sustain earnings over the next three years. However, we expect the general construction sector to remain relatively quiet at least until the tabling of Budget 2019 on 2nd November 2019.
On a positive note, Protasco have secured the renewal of maintenance for Federal roads in Selangor, Pahang, Terengganu and Kelantan, agricultural roads in Perak and State roads in Perak in April 2018. The maintenance segment’s outstanding orderbook of approximately RM4.80 bln will continue to provide long term earnings visibility until February 2028. Moving forward, the group will actively bid for maintenance for building and road works.
As of 2Q2018, the group’s unsold property stocks amounts to approximately RM30.0 mln, predominately on De Centrum Unipark Phase 2 project. We also note that Protasco has launched Sentrio Business Centre with a GDV of RM66.0 mln and D'Perdana Telipot with a GDV of RM160.0 mln in July and August 2018 respectively.
With the reported earnings coming below our estimates, we slashed our earnings forecast by 30.4% and 11.5% to RM20.2 mln and RM25.7 mln for 2018 and 2019 respectively to reflect the slower execution in both the construction and maintenance segments. We also maintain our HOLD recommendation on Protasco, but with a lower target price at RM0.50 (from RM0.62). We expect Protasco’s earnings recovery to be anchored mainly from its bread and butter business in 2H2018 - construction and maintenance segments that possess solid unbilled orderbooks.
We arrive our target price on a sum-of-parts basis by ascribing an unchanged target PER of 8.0x to its 2019 fully diluted construction earnings due to the lingering uncertainties surrounding the general construction sector as well as a target PER of 8.0x (unchanged) to its fully diluted 2019 concession and engineering services’ earnings. Its education and trading units’ valuations remain pegged at target PERs of 6.0x respectively due to their smaller scale businesses, while its property development division’s valuation is derived from ascribing an unchanged 0.6x to its BV.
Risks to our forecast and target price include inability to attain the targeted construction orderbook replenishment amount, delays in project completion and failure or delay in concession contract renewals. Further tightening of monetary policies will also be unfavourable to its property development business.
Source: Mplus Research - 29 Aug 2018
Chart | Stock Name | Last | Change | Volume |
---|
Created by MalaccaSecurities | Nov 01, 2024
TraitorHunt
https://klse.i3investor.com/blogs/fraudhunt/172278.jsp
Money laundering bu chong ket pen. Gone case.
2018-09-04 01:29