We met with Prestariang's management yesterday to gain updates on its current business as well as its plans going forward. Though its university education arm is progressing below expectations, we remain positive on the group‟s prospects. We revise our TP upwards to RM2.32 based on a higher P/E of 10.5x as we see more exciting growth in the company in the near-term.

Not a smooth start for UniMy. Management has guided below-expectation numbers for the intake in its UniMy University. Out of 336 offers, only 18 students were recruited. It is now targeting 200 students for 2013 and 600 students next year, down from the earlier expectation of 600 students and 1,200 students respectively. Despite the poor numbers, the group is confident that the university will be able to breakeven this year.

Spreading its arms in O&G. The company is currently in talks to acquire an O&G training centre to expand its footprint in O&G training activities. The training is mainly catered to providing upstream and downstream technical skills in O&G field. Apart from that, the group is also looking to team up with a reputable O&G player to provide up-skilling services to more fresh graduates. Apart from training, Prestariang is also going to be the Autodesk exclusive distributor for O&G software, which is expected to fetch lucrative earnings margin.

Organic business will grow as well. Given the newer version of Windows programme, Windows 8, Prestariang is looking for new opportunities in offering the software and training to its existing clients. As its existing homegrown programme, IC Citizen, has managed to attract a promising number of students, the group will continue to roll out more homegrown courses such as SmartGreen and Proficiency in Enterprise Communication.

Earnings guidance. Management guided that the upcoming 2QFY13 results will be much better Q-o-Q and Y-o-Y, and also indicated an increase in dividend payment. Our expectation is that 2Q‟s earnings will not be less than RM12m and DPS of at least 3sen.

Increasing our TP to RM2.32. We retain our Outperform call with a higher target price of RM2.32 based on 10.5x FY14 EPS. Since post-General Elections, the company‟s share performance has been remarkable; up more than 80%. Employees Provident Fund and American International Assurance have both emerged as substantial shareholders in the company, owning 6.3% and 5.1% respectively.

Source: PublicInvest Research - 1 Aug 2013