We caught up with Prestariang’s management recently and did some on-the-ground checks to determine the progress of its proposed university. While we do not deny the fact that the stock is exposed to political risks given that over 90% of its revenue is from public sector, we believe the recent selldown in its share price is rather unjustified as operations remain largely intact. 3QFY12 numbers would likely be within our expectations with our FY12 target of RM40m. All in, maintain our BUY call with our FV unchanged at RM2.15 based on 10x FY13 PER.
Signing ceremony to be held soon. Management confirmed that the Vice Chancellor for its proposed University of Computing will come onboard by early next week. Though details are still scanty at this juncture, we understand that more information on the newly
proposed venture will be shared by end of this month, pending the official MOU signing ceremony with its academic partner as well as IT industry partners. From our channel checks, we believe a top-notch tertiary education partner has agreed in principle to help establish the proposed university while some of Prestariang’s existing technology partners with the likes of Microsoft, IBM, Oracle, as well as Autodesk would likely be involved in setting up the curriculum. As for commercial operations, we gathered that first intake of about 300 students will take place by end-1Q13 with subsequent intake of equivalent size in Sept 2013. We are modeling for RM1.9m and RM6.0m profit at gross level from its university venture in FY13 and FY14 respectively.
Core operations largely on track. On its existing operations, management mentioned that it is working towards replenishing its existing orderbook, which stood at approx. RM130m as of June 2012. Some of the initiatives in the pipeline include rolling out its in-house developed GreenIT solution by end of this year, to renew its existing contract in provision of Autodesk software with Ministry of Higher Education, and to accelerate the implementation of its self-owned titles such as proficiency of English language and potentially halal certification program.
3QFY12 net profit of RM11m. The group is scheduled to release its 3QFY12 by mid-Nov. Given its orderbook-driven nature, we expect its 3QFY12 core earnings to come within our expectations at RM11m with a likely interim DPS of 3.0 sen.
BUY. Despite the recent selldown in its share price which we attribute to its higher political risk nature of sourcing over 90% of its income from the government ministries, we are convinced that Prestariang’s fundamentals remain largely intact. In fact, we believe that a re-rating is in store pending the formal conclusion of its proposed university venture. Hence, maintain our BUY call with our FV unchanged at RM2.15 based on 10x FY13 PER.
Signing ceremony to be held soon. Management confirmed that the Vice Chancellor for its proposed University of Computing will come onboard by early next week. Though details are still scanty at this juncture, we understand that more information on the newly
proposed venture will be shared by end of this month, pending the official MOU signing ceremony with its academic partner as well as IT industry partners. From our channel checks, we believe a top-notch tertiary education partner has agreed in principle to help establish the proposed university while some of Prestariang’s existing technology partners with the likes of Microsoft, IBM, Oracle, as well as Autodesk would likely be involved in setting up the curriculum. As for commercial operations, we gathered that first intake of about 300 students will take place by end-1Q13 with subsequent intake of equivalent size in Sept 2013. We are modeling for RM1.9m and RM6.0m profit at gross level from its university venture in FY13 and FY14 respectively.
Core operations largely on track. On its existing operations, management mentioned that it is working towards replenishing its existing orderbook, which stood at approx. RM130m as of June 2012. Some of the initiatives in the pipeline include rolling out its in-house developed GreenIT solution by end of this year, to renew its existing contract in provision of Autodesk software with Ministry of Higher Education, and to accelerate the implementation of its self-owned titles such as proficiency of English language and potentially halal certification program.
3QFY12 net profit of RM11m. The group is scheduled to release its 3QFY12 by mid-Nov. Given its orderbook-driven nature, we expect its 3QFY12 core earnings to come within our expectations at RM11m with a likely interim DPS of 3.0 sen.
BUY. Despite the recent selldown in its share price which we attribute to its higher political risk nature of sourcing over 90% of its income from the government ministries, we are convinced that Prestariang’s fundamentals remain largely intact. In fact, we believe that a re-rating is in store pending the formal conclusion of its proposed university venture. Hence, maintain our BUY call with our FV unchanged at RM2.15 based on 10x FY13 PER.
Source: OSK
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