PRESBHD (5204) : Prestariang - Expect good news in 1Q15?
Target RM2.94 (Stock Rating: ADD)
If all goes well, there could be some positive news for Prestariang in 1Q15. The company is bidding for Microsoft software subscription for all government ministries and the PISA accelerated training (PAP) programme for secondary schools. We have not assumed any potential earnings from these two contracts. We maintain our FY14-16 EPS forecasts and Add call. Our target price basis of 19.2x FY16 P/E is unchanged, at 20% premium over our sector target. The potential catalysts for the stock include the successful bid for the PAP, “IC Citizen” contract extension and winning the Microsoft government contract.
What Happened
Prestariang participated in the Malaysia Corporate Day conference yesterday and met around 35 fund managers (in small group meetings). If all goes well in 1Q15, there could be two positive surprises this quarter: 1) Prestariang is bidding for the supply of Microsoft software subscription to all government ministries nationwide. In the past, the government retained seven distributors for Microsoft software subscription. However, the authorities are looking to consolidate its supplier base in order to manage these assets more efficiently, 2) Prestariang could be asked to start the PISA accelerated training (PAP) programme nationwide soon. This is because we believe that the government is focused on improving the country’s PISA ranking with the next PISA assessment in 2015. We have not assumed any potential earnings from the Microsoft software subscription contract and PAP.
What We Think
In our view, the worse is over and 2015 should be a year of recovery for Prestariang. If all goes smoothly, 2015 should also be a record year for the company’s earnings. UniMY should achieve breakeven this year and the company is confident of securing the IC Citizen contract extension soon. Given the government’s interest in boosting the country’s PISA rankings, we believe that Prestariang stands a good chance of securing the PAP contract.
What You Should Do
Continue to accumulate the stock as the newsflow should be positive for the company over the next few months. We continue to like Prestariang’s defensive and recurring income-based business model. The company continues to work on its major long-term recurring income project and there should be some positive newsflow on this project in the next 1-2 quarters.
Source: CIMB Daybreak - 07 January 2015
Target RM2.94 (Stock Rating: ADD)
If all goes well, there could be some positive news for Prestariang in 1Q15. The company is bidding for Microsoft software subscription for all government ministries and the PISA accelerated training (PAP) programme for secondary schools. We have not assumed any potential earnings from these two contracts. We maintain our FY14-16 EPS forecasts and Add call. Our target price basis of 19.2x FY16 P/E is unchanged, at 20% premium over our sector target. The potential catalysts for the stock include the successful bid for the PAP, “IC Citizen” contract extension and winning the Microsoft government contract.
What Happened
Prestariang participated in the Malaysia Corporate Day conference yesterday and met around 35 fund managers (in small group meetings). If all goes well in 1Q15, there could be two positive surprises this quarter: 1) Prestariang is bidding for the supply of Microsoft software subscription to all government ministries nationwide. In the past, the government retained seven distributors for Microsoft software subscription. However, the authorities are looking to consolidate its supplier base in order to manage these assets more efficiently, 2) Prestariang could be asked to start the PISA accelerated training (PAP) programme nationwide soon. This is because we believe that the government is focused on improving the country’s PISA ranking with the next PISA assessment in 2015. We have not assumed any potential earnings from the Microsoft software subscription contract and PAP.
What We Think
In our view, the worse is over and 2015 should be a year of recovery for Prestariang. If all goes smoothly, 2015 should also be a record year for the company’s earnings. UniMY should achieve breakeven this year and the company is confident of securing the IC Citizen contract extension soon. Given the government’s interest in boosting the country’s PISA rankings, we believe that Prestariang stands a good chance of securing the PAP contract.
What You Should Do
Continue to accumulate the stock as the newsflow should be positive for the company over the next few months. We continue to like Prestariang’s defensive and recurring income-based business model. The company continues to work on its major long-term recurring income project and there should be some positive newsflow on this project in the next 1-2 quarters.
Source: CIMB Daybreak - 07 January 2015
