2014-03-24 [FA][G] About Protasco

source: [Blackspy fundamental]

About Protasco

It is a defensive stock given that the company profits highly from its road maintenance and construction division. 

Protasco is maintaining about 14000km of federal and state roads under long term maintenance contracts and concession. The outstanding value for these road maintenance and construction works stands at rm1.7 billion which would provide earnings visibility to group for the coming three years from 2013.

Protasco’s crisis is the civil unrest in Libya, which led to the company halting operations in Malaysia in 2011. Protasco has written off rm40 million in provisions over the past two years from 2013 which the company is seeking to claim form the Libyan government.

In spite of the imminent risks, it is not deterred from its work there and is in fact facing considering extending its stay beyond the completion of the suspended works.

Its O&G Division …

Expect its proposed O&G business through the purchase of a 63% stake in PT Anglo Slavic Indonesia (PT ASI) to contribute no less than 15% to its earnings from 2014.


However its entry into the oil and gas sector has been delayed hopes the restated S&P that it signed with an Indonesian party in Jan 2014 will expedite its entry into the sector.

The restated SPA will enable the company to take control of PT-ASI and commence with the exploration, well reactivation and construction of the well in accordance with the agreed development plan approved by PT Pertamina, Indonesia’s state owned oil corporation.

There are approximately 30 wells in the field, some of which may be able to be reactivated.

Under the restated SPW, PT-ASU is required to resolve all outstanding issues within six months from Feb 2014 to the satisfaction of Protasco, failing which the company has the right to terminate the restated SPA. 


To recap, Protasco will fund the acquisition via internally-generated funds. The investment represents 24% of Protasco's net assets. 


PT ASI's unit, PT Haseba, has a 10-year contract to extract oil and gas from KST Field starting 2004. The extraction works, however, were halted as PT ASI faced financing issues.

PT ASI made a net loss of RM346,000 for the five-month period ended May 31 2013, with net assets of RM31.4 million.

PT ASI has attached a profit guarantee of a consolidated net profit of US$22 million in the next four years from Jan 2014. The deal includes a US$5 million advance to be made by Protasco to PT ASI to conduct exploration, wells re-activation and/or construction of wells. 


This is necessary to obtain an extension of the production management partnership agreement between PT Pertamina EP and PT Haseba beyond its expiry on December 14 2013 for a further 10 years to December 14 2024, on the best terms possible. 

Its Property Division ….

Tey Por yee is using his two companies (Asdion and Protasco) as his platform to fast track his property development business outside the Klang Valley. In the Sept 2013, the two companies teamed up to develop property in Johor.

Tey is the largest shareholder in both Asdion and Protasco with a 28.13% stake in Asdion and 18.51% stake in Protasco. He also has a 2.44% stake in Nextnation.

Nextnation had acquired am 11 storey office building in Bangsar South for rm64 million.

Protasco also has development in Kajang, a mixed development on 40ha of freehold land with a GDV of rm6 billion.

Besides being an indicator of Tey’s expanding property development interests, the formation of the JV marks a turning point for Asdion which is involved in ICT.


Also, Protasco owns approximately 100 acres of freehold land in Kajang for a mixed development known as De Centrum City. The land’s GDV alone is worth about 15 times more than the company’s market cap of rm420 million as at 31 July 2013. 


This RM10 billion De Centrum integrated development in Bangi is essentially the redevelopment of its 100-acre University Kuala Lumpur (IUKL) land acquired at a very low price more than a decade ago.

Property development is still a small part of its business but the group intends to make the segment one of its core businesses. The construction business will remain the largest contributor, contributing rm99.5 million or 96% of its operating profit.

It owns a 40ha plot in Kajang of which it plans a mixed development worth a GDV of rm6.6 billion.


Its Financial Strength … 
Protasco is in a net cash position of about rm105 million. Cash and its equivalent stood at rm147.13 million as at end FY2012 while total borrowings amounted to rm42.3 million.

Its healthy balance supports its aggressive business expansion.

Debt to equity ratio stood at 0.697 times as at end FY2012. 
It has an unofficial dividend payout policy of 60% of net income every year.

Tey Por Yee became the second largest shareholder with a 15.13% stake in Adison. Tey is also the CEO, MD and executive director of Nextnation, a director of Protasco Bhd and former executive provider of Petrol One Res Bhd.

Tey Por Yee’s Shareholdings as of Oct 20 2013 …
· 18.51% in Protasco;
· 28.51% in Ire Tex Corp Bhd;
· 28.13% in Protasco;
· 13.33% in Hytex;
· 2.44% in Nextnation;
· 18.38% in Malaysian AE Models