THE BUZZ
Yesterday, Century Software (CSHB) announced that its
wholly-owned subsidiary, Century Software (M) SB, had won two contracts
worth a total of RM33.5m from Pertubuhan Keselamatan Sosial
(Perkeso) to develop and implement applications on the latter’s Social Security
Information Management System for a period of 16 months commencing this
quarter, with a warranty period of 1 year.
OUR TAKE
More on the projects.
For the first project, worth RM24.5m,
CSHB will be developing enforcement, benefits, collection and disbursement applications for
Perkeso’s Social Security Information Management System. In the second
project, valued at RM9m, the company will
be developing the prevention, customer service, enterprise content management
system and corporate website applications. We also gather that the capex for
both projects would be minimal as there is no need to purchase new hardware.
Earnings boost.
In our earlier FY12/FY13 forecasts, we had factored in some contract wins as
well as a full-year financial contribution from the newly acquired Indonesian Investment
Management Solution (IMS) arm, PT Praisindo Teknologi, which registered stellar
numbers in 4QFY11 owing to the highly lucrative PBT margin of 72%. Nonetheless,
we are still raising our FY12/FY13 revenue assumption by 10%-12% to take into
account the potential of the company
winning more new contracts. This is based
on the fact that CSHB had out-bid 13
reputable local and international software companies to win the jobs from
Perkeso. We gather that the company has
identified another RM36.5m worth of new projects
it can tap. Accordingly, we are
revising our FY12/FY13 core
earnings forecasts by 8%-13% to RM20.3m/RM21.6m, assuming a typical net profit
margin of 30%.
Upgrade to BUY.
With these Perkeso contracts being secured along with other potential jobs in
the pipeline, we are upgrading our
recommendation on CSHB to BUY from NEUTRAL, with a fair value of RM0.57,
rolling over to 2013 based on a 9x FY13 PER.
Source: OSK188
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