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Thursday, May 23, 2013

Prestariang - Commendable Start In 1QFY13 (OSK)

Within expectations. PRES recorded 1QFY13 revenue of MYR26.2m (-3.2% y-o-y; +8.1% q-o-q), which we attribute to higher contributions from its ICT training and certification division. On a sequential basis, PBT was 9.6% lower at MYR9.0m owing to higher operating expenses incurred during the quarter. Overall, the company’s 1QFY13 core earnings of MYR9.0m (+12.2% y-o-y; -13.2% q-o-q) was within our estimate, making up 19.4% of our annualised forecast.

Attractive dividend payout. The company declared a first interim DPS of 2.5 sen, which translates into a payout ratio of 61.1% for the quarter under review. We continue to expect PRES to pay out a DPS of 11.0 sen and 12.0 sen for FY13 and FY14 respectively. These will translate into appealing yields of 6% to 7% over the next two years.

More opportunities in O&G training. PRES recently secured a MYR2m contract from GEMS Malaysia SB to provide ICT training for O&G industry and certification for 250 university graduates for a period of 18 months. We understand that Management is still in talks with a number of O&G companies to offer Autodesk and other certification programmes. With Malaysia’s general elections concluded, we continue to see potential growth for the company in this lucrative industry.

Maintain BUY. Overall, we remain positive on the company’s prospects in ICT training for O&G industry and make no changes to our assumptions for now.  We maintain our BUY call, with our FV now at MYR2.36, as we roll over our valuations to FY14, pegged to an unchanged 10x P/E.

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