source: [thestar online]
RHB Research maintains Buy on Pintaras
KUALA LUMPUR: RHB Research has maintained its Buy call on Pitaras with an unchanged fair value of RM7 based on based on 10 times CY14 EPS of 70 sen, in line with its one-year forward target P/E of 10-16 times for the construction sector.
In a note on Monday, the research house said Pintaras 1Q14 net profit came in at only 20% of its full-year forecast but it expects stronger quarters ahead as progress and billings from its newly-secured contracts accelerate.
“1QFY14 net profit eased 35%/26% q-o-q/y-o-y respectively, as newly-secured jobs have yet to hit significant billing milestones.
“Pintaras is able to pick the best jobs to bid, and put in the winning bids given its full range of piling machines, tools and accessories (which reduces the need for outsourcing) and its in-depth knowledge of the ground conditions.
“It is one of the top four to five piling companies in Malaysia, each control a market share of 5% to 10%,” it said.
RHB said prospects of the piling sub-sector is strong backed by the RM73bil Klang Valley MRT project, the proliferation of high-rise developments and the chronic shortage of piling capacity in the market, which boosts piling rates.
“Typically, piling and related works make up 5% to 10% of total project value. It could be higher, for example 10% to 20% of total project value for certain infrastructure such as bridges, or if the ground conditions are inferior,” it said.
