PRESBHD (5204) : Prestariang - In the “Big” league
Target RM2.94 (Stock Rating: ADD)
The MOE and Prestariang’s announcement on the Big Data Competency Centres (BDCC) initiative was a positive surprise to us. The initiative should provide a major boost in UniMY’s student numbers in 2015 onwards. We maintain our FY14-16 EPS forecasts. As the year-end approaches, we roll over our 19.2x target P/E (at 20% premium over average sector P/E to reflect the potential earnings boost from private placement proceeds) to CY16, which raises our target price to RM2.94. We maintain our Add call. The potential re-rating catalysts include news on the major project, “IC Citizen” contract extension and strong student numbers for the oil & gas school.
What Happened
Today, Minister of Education II Dato’ Seri Idris Jusoh launched the first phase of the country’s Big Data Competency Centres (BDCC) initiative, involving four universities and one polytechnic. The BDCC is a joint initiative between Prestariang and the Ministry of Education (MOE). Prestariang will manage the centres and courses under the existing 13P and 2MUSE programmes. University Malaysia of Computer Science & Engineering (UniMY) was chosen as the official academic partner, which will be responsible for the provision of training and certification. Universiti Teknologi MARA (UiTM) will be included in the second phase of the BDCC.
What We Think
The BDCC development is a positive surprise to us. Based on industry sources, the country’s demand for big data analytics specialists is expected to increase 5x from around 4,000 currently to 20,000 by 2020. We have not assumed any earnings contribution from BDCC. In addition, we expect new corporate developments at UniMy towards year-end. At its 2Q14 briefing, Prestariang said that a third-party expressed interest in acquiring a stake in UniMY.
What You Should Do
Remain invested in the stock and look to 2015. The “IC Citizen” contract is expected to be extended in 2015. Furthermore, we expect positive newsflow on a major long-term project with recurring income that the company has been working on in 2014. If successful, this project would bring Prestariang to a higher level. 3Q14 results are due to be announced on 26 Nov. We believe that there will not be any negative surprises and estimate that 3Q14 net profit will be at a similar level to the RM7m in 2Q14. Share price took a beating since the July high, undeserved in view of the positive long-term outlook. 2015 P/E is only at 10.8x and this does not include potential earnings from the major project the company is working on.
Source: CIMB Daybreak - 14 November 2014
Target RM2.94 (Stock Rating: ADD)
The MOE and Prestariang’s announcement on the Big Data Competency Centres (BDCC) initiative was a positive surprise to us. The initiative should provide a major boost in UniMY’s student numbers in 2015 onwards. We maintain our FY14-16 EPS forecasts. As the year-end approaches, we roll over our 19.2x target P/E (at 20% premium over average sector P/E to reflect the potential earnings boost from private placement proceeds) to CY16, which raises our target price to RM2.94. We maintain our Add call. The potential re-rating catalysts include news on the major project, “IC Citizen” contract extension and strong student numbers for the oil & gas school.
What Happened
Today, Minister of Education II Dato’ Seri Idris Jusoh launched the first phase of the country’s Big Data Competency Centres (BDCC) initiative, involving four universities and one polytechnic. The BDCC is a joint initiative between Prestariang and the Ministry of Education (MOE). Prestariang will manage the centres and courses under the existing 13P and 2MUSE programmes. University Malaysia of Computer Science & Engineering (UniMY) was chosen as the official academic partner, which will be responsible for the provision of training and certification. Universiti Teknologi MARA (UiTM) will be included in the second phase of the BDCC.
What We Think
The BDCC development is a positive surprise to us. Based on industry sources, the country’s demand for big data analytics specialists is expected to increase 5x from around 4,000 currently to 20,000 by 2020. We have not assumed any earnings contribution from BDCC. In addition, we expect new corporate developments at UniMy towards year-end. At its 2Q14 briefing, Prestariang said that a third-party expressed interest in acquiring a stake in UniMY.
What You Should Do
Remain invested in the stock and look to 2015. The “IC Citizen” contract is expected to be extended in 2015. Furthermore, we expect positive newsflow on a major long-term project with recurring income that the company has been working on in 2014. If successful, this project would bring Prestariang to a higher level. 3Q14 results are due to be announced on 26 Nov. We believe that there will not be any negative surprises and estimate that 3Q14 net profit will be at a similar level to the RM7m in 2Q14. Share price took a beating since the July high, undeserved in view of the positive long-term outlook. 2015 P/E is only at 10.8x and this does not include potential earnings from the major project the company is working on.
Source: CIMB Daybreak - 14 November 2014
