Prestariang announced yesterday that it has inked an MOU with MIE Corp Holdings S/B to set up a joint-venture company for the supply of manpower to Malaysia‟s Oil & Gas (O&G) industry, particularly for the RAPID project in Johor. We laud the move as it will not only create career placement for its O&G downstream students, it will also help generate ancillary income for the Group in the future. We reduce our TP from RM1.81 to RM1.62 however, after adjusting for our lowered FY14-16 earnings forecasts due to the delay in replenishing its existing contracts and the longer period taken to turn around its education arm. Our Neutral call remains unchanged.
Salient details of the MOU. According to the Memorandum of Understanding (MOU), Prestariang and MIE Corp Holdings, a local consortium partner together with CTCI-Chiyoda JV from Taiwan and Synerlitz (Malaysia) S/B, who is also a successful tenderer of a particular package under the Refinery and Petrochemicals Integrated Development (RAPID) project, agree to establish a 51: 49 joint-venture (JV) company. It will undertake the setting-up, operation and management of a business entity to source, acquire, train and supply skilled and semi-skilled workers (both Malaysian and foreign) in relation to the RAPID project in Pengerang, Johor and also also to the industry in general. Other studies include the assessment of demand for skilled & semi-skilled workers, cost of hiring in the market, current supply to the market, work permit, health screening, CIDB certificates, accommodation, logistics, training, placement arrangement and fee-based payroll structure.
Creating value chain for the O&G manpower. Currently, the Group provides training programmes for the O&G downstream industry in Johor. The establishment of the JV will not only help improve the employability of its trainees and expand the the industry net work, we believe it will also generate ancillary income for the Group in the future given the “one-stop” service for RAPID project workforce and also less worries for the RAPID players, who need at least 10,000 workers.
Revising our earnings forecasts lower, to account for the delay in replenishing its existing contracts as well as the longer time taken to turn around the education arm which has been a drag on the company‟s earnings. Thus, we revise our earnings forecasts for FY14-16 by 10%-19%. We expect the 2H earnings to be relatively weaker compared to last year. We maintain our Neutral call with a lower TP of RM1.62.
Source: PublicInvest Research - 4 Nov 2014
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Created by PublicInvest | Nov 12, 2024
Ok..removed for the watchlist...bye bye...earn 2 round from this. Good enought
2014-11-06 12:03
fortunebullz
Prestariang will be lump together with all O&G counters during this bearish oil price! Just watch don't buy!
2014-11-04 12:27