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 PESTECH (5219) - The NEXT SUPER STOCK in the making

Sector:Industrial Products & Services

Current Price: 0.905

Target Price: 1.33 (Based on Kenanga Research Report)

Market Listing: Main

Syariah: Yes

Company Background

PESTECH International Berhad (PESTECH or the Company) is a Malaysian integrated electrical power technology company listed on the Main Market of Bursa Malaysia (stock code: PESTECH 5219) since 2012.

The Company derived its name from “Power System Technology” and involves in four (4) major business segments:

1.Power Transmission Infrastructure

2. Power Generation and Rail Electrification

3. Transmission Asset

4. Power Products and Embedded System Software


Source: http://pestech-international.com/about/about-pestech/

Why PESTECH is the next SUPER STOCK?

1. Earnings growth for two years seen from Pestech’s RM1.7b order book.

Source:https://www.theedgemarkets.com/article/earnings-growth-two-years-seen-pestechs-rm17b-order-book


2. AT a time when the Covid-19 pandemic is testing financial resilience, Pestech International Bhd has remained largely unscathed.


3. The power infrastructure specialist, which has presence in more than 20 countries, is well-supported by stable recurring income from its three major projects in Cambodia — two of which were completed this year.


4. Pestech to be collecting a monthly income of US$2.3 million to US$2.4 million from two build-transfer and one concession projects in Cambodia.


5. Pestech now has three major completed projects generating recurring cash flow for the group.

It is worth noting that the monthly recurring income from the projects will increase over time as it is based on fixed schedule payment.


6. Will be collecting US dollar income from Cambodia, the Philippines and Papua New Guinea (PNG) and hopeful of closing two more projects in Cambodia.


7. Still have some existing projects in the Philippines and will continue to tender for new projects in Myanmar and Cambodia and also they see opportunity in Uzbekistan.


8. EGM to pass resolution for PROPOSED LISTING OF PESTECH (CAMBODIA) PLC (PCL), A WHOLLY-OWNED SUBSIDIARY OF PIB ON THE MAIN BOARD OF CAMBODIA SECURITIES EXCHANGE very soon.


9. Upon listing, Pestech (Cambodia) is expected to be worth about US$60 million in terms of market capitalisation. The company plans to raise fresh capital of not more than US$10 million.


Points 2-9 Source: https://www.theedgemarkets.com/article/pestech-counts-its-blessings-cambodian-ventures-bear-fruit


10. Pestech International Bhd announced its wholly-owned subsidiary Pestech Sdn Bhd, through PestechYongfu JV (joint venture), had received a letter of acceptance for Award from PNG Power Ltd (PPL) for the engineering, procurement and construction contract for PPL’s Port Moresby System Study and 11kV Distribution Upgrade for a contract price in the aggregate of US$17.03 million (RM70.5 million).

Source: https://www.theedgemarkets.com/article/pestech-could-benefit-revival-local-megaprojects


11. Pestech International Bhd announced that its wholly-owned subsidiary Pestech Sdn Bhd has received a notice of award from National Grid Corp of the Philippines (NGCP) for the engineering, procurement, construction and commissioning (EPCC) contract for the South Luzon substations upgrading project stage 1 (San Juan and Lumban substations) and stage 2 (Daraga substation) for a total contract value of about RM111.7 million, consisting of an offshore portion of US$16.64 million (RM68.39 million) and an onshore portion of 528.8 million Philippine pesos (RM42.82 million).

Source: https://www.theedgemarkets.com/article/earnings-growth-two-years-seen-pestechs-rm17b-order-book


12.Bidding for LSS3 and they hope to win it.

Source: https://www.theedgemarkets.com/article/pestech-sets-its-sights-beyond-lss3
https://www.nst.com.my/news/nation/2020/05/595985/govt-offer-1000mw-solar-quota-under-lssmentari-program


13.Pestech International Bhd sees a “strategic success” in its recent smart meter supply contract from Tenaga Nasional Bhd (TNB), as it seeks to establish the business here and regionally.

Source: https://www.theedgemarkets.com/article/pestechs-smart-meter-supply-job-win-open-more-doors


14. Pestech could benefit from revival of local megaprojects as there are at least four mega transportation infrastructure projects, namely the HSR, the Klang Valley Double Track Phase 2, Light Rail Transit Line 3 and the East Coast Rail Link, in the near term for Pestech to bid for in the rail electrification packages.

Source: https://www.theedgemarkets.com/article/earnings-growth-two-years-seen-pestechs-rm17b-order-book


Conclusion

We believe the market has yet to appreciate the growth potential in this stock, given the earnings growth potential.
We continue to like this niche utility infrastructure play which could potentially benefit from the revival of mega projects domestically and the fast-growing energy infrastructure development market in Cambodia.


Disclaimer

The above opinion is never intended to be a BUY CALL whatsoever. We are sharing our observations ONLY based on fundamental; past history; current trading pattern; charts etc. Please make your own informed decision before buying this share or whatever share for that matter.

https://klse.i3investor.com/blogs/informationprovider/2020-06-21-story-h1508904247-PESTECH_5219_The_NEXT_SUPER_STOCK_in_the_making.jsp
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