• Maintain BUY and MYR1.85 TP, 21% upside with c.2% FY25 (Jun) yield. Pintaras Jaya’s 1QFY25 core earnings of MYR2.1m (>100% YoY) met our but exceeded Street estimates – at 23% and 42% of full-year projections. Job prospects from Singapore remain positive, with 2025-2028F public sector construction demand forecasted at SGD19-23bn. Due to this and its lower cost pressures from legacy projects, PINT’s valuation is cheap – it is trading at an attractive 0.7x FY25F P/BV (-1SD from its and Bursa Malaysia Construction index’s 5-year averages).

• Results review. EBIT of the construction arm jumped >100% YoY to MYR8.2m in 1QFY25, backed by a 61% YoY revenue growth in the quarter amidst stronger construction activity in Singapore (c.90% of orderbook from Singapore). Moreover, we view that cost pressures from previously loss- making projects (particularly in Malaysia) secured before the Russia-Ukraine conflict have lessened, as most projects have been completed. Meanwhile, the manufacturing segment posted a 1QFY25 EBIT of MYR2.3m (60% YoY), with the margin improving to 16.3% (1QFY24 PBT margin: 12%) – thanks to the higher demand and improved cost efficiencies from economies of scale.

• Orderbook. YTD new job wins are worth MYR242m (vs our new job win target of MYR400m for FY25), bringing the outstanding orderbook to MYR325m as of end-October (1.3x cover ratio). PINT’s current orderbook includes a mix of railway-related, private residential, and Housing & Development Board (HDB) projects in Singapore. We continue to remain upbeat on the robust pipeline of public sector projects in Singapore, with 9MCY24 public sector awards standing at SGD19.8bn (+59% YoY).

• Outlook. We do not anticipate any delays, especially with upcoming election in Singapore (likely in 2025). Major projects slated for CY25 include new HDB developments, the Cross Island MRT Line (Phase 3) and Changi Airport's Terminal 5. PINT’s industrial experience (via two semiconductor factories for major companies) enables it to capitalise on spillover benefits from a potential further heightening in US-China tensions, which are attracting more tech giants to expand into Singapore.

• Forecasts. As PINT’s earnings are within expectations, we make no changes to our projections. Therefore, our TP of MYR1.85 remains unchanged - pegged to a 0.9x FY25F P/BV, and with a 4% ESG discount inked in. The target P/BV is justified on account of the potential benefit from Singapore’s construction sector growth – the island nation’s GDP from this sector has expanded by more than 3.5% in each quarter of CY24 so far.

• A major rerating catalyst includes PINT’s potential participation in Changi’s Terminal 5 piling works, where construction is slated to begin in 1HCY25. Key risks: Slower-than-expected job replenishments and project delays.

Source: RHB Securities Research - 2 Dec 2024