Friday 16 November 2012

Prestariang - Long Term Prospects Still Solid

Prestariang’s 9MFY12 core earnings jumped 16.6% y-o-y to RM26.9m on higher contribution from its training and certification division. The numbers were largely in line, at 66.0% of our full-year forecast. That said, we are trimming our FY12 net profit estimate by some 6.6%, as we believe the group is likely to incur start-up expenses for its proposed university in 4QFY12, but are leaving our FY13 and FY14 numbers unchanged. Management has declared a third interim DPS of 3.0 sen, bringing its YTD DPS to 7.0 sen, implying a payout ratio of 57.3%. Maintain BUY, with our FV retained at RM2.15, based on an unchanged 10x FY13 PE.

Decent quarter. Prestariang’s 9MFY12 revenue rose 8.5% y-o-y to RM85.9m driven by its training and certification division, whose contribution surged 47.5% y-o-y to RM28.5m. By the same token, gross profit jumped 15.6% y-o-y to RM38.0m, with a 270bps margin improvement due to a favorable revenue mix. All in, the 9MFY12 core earnings amounted to RM26.9m, which we deem in line with our expectations at 66.0% of our full-year forecast. On a sequential basis, the 3QFY12 revenue of RM35.3m was up 50.6% q-o-q and 6.7% y-o-y on improved contribution from its software licensing division. Its quarterly net profit, however, grew by a smaller 18.0% y-o-y and 1.4% q-o-q to RM10.2m due to higher opex during the quarter.

Generous payout. Prestariang has declared a third interim DPS of 3.0 sen, bringing its YTD DPS to 7.0 sen, for a payout ratio of 57.3%. We expect the company to pay another 3.0 sen in 4QFY12, followed by 11.0 sen in FY13 and 12.0 sen in FY14. These will translate into a lucrative yield of 8.2%-9.8% p.a. over the next three years.

Likely to incur start-up expenses in 4QFY12. While the 9MFY12 numbers are largely in line, we see the company incurring start-up expenses in relation to its proposed university in 4QFY12. Prestariang’s management recently announced the appointment of Professor Datuk Dr Halimaton Hamdan as the Vice Chancellor of its boutique university. We understand that it will begin to advertise its first intake commencing next month. That said, we believe this could give rise to one-off expenses amounting to RM2m-RM3m to kick-start its university operations. Hence, we are taking the opportunity to trim our FY12 EPS forecast by 6.6% to 17.3 sen while leaving our FY13 and FY14 numbers unchanged.

BUY. All in, we are maintaining our BUY call, with our FV unchanged at RM2.15, pegged at an unchanged 10x FY13 PE. While we expect a somewhat subdued 4QFY12, we continue to like Prestariang’s long-term fundamentals as the group progressively commences its newly proposed university, which we see as crucial in creating a recurring earnings stream.
SouSSfa[,lfSource: OSK

No comments:

Post a Comment