Pintaras to grow steadily on Singapore works

by LYDIA NATHAN / pic credit:

PINTARAS Jaya Bhd should grow steadily on ongoing construction jobs in Singapore and economic recovery despite a challenging operating environment.

RHB Investment Bank Bhd (RHB Research) analyst Eddy Do Wey Qing noted that the progress of piling works by Pintaras in Singapore would support the growth expected to be around 59% year-on-year (YoY) in the financial year 2021 forecast (FY21F), coming from a low base.

“Despite our near-term optimism, we stay conservative at this point as the issues of Covid-19 continue to linger. On the positive side, we understand the construction sector in Singapore as a whole remains positive.

“This is despite some postponements in the awarding of some public sector projects and developers delaying their planned rollout of new projects amidst a tough operating environment,” Do said in a research note yesterday.

He said some of the downside risks included failure to secure new contracts, more intense competition among piling contractors, and a prolonged downturn in the retail and property markets.

He further said that Pintaras has increased efforts to minimise wastage by ordering cut-to-size tin plates and reduce wastage cost by selling off-cuts as scrap in advancing its environmental, social and governance agenda.

“Wastage control on raw materials is carried out by close supervision and continuous training to all personnel involved to ensure minimal wastage. Further plans for improvement are an ongoing effort,” he said.

The analyst has maintained a ‘Buy’ call on Pintaras with an unchanged target price of RM3.03 due to outperformed results.

“We keep our FY22F to FY23F unchanged. Pintaras estimated outstanding construction orderbook is currently worth RM320 million, further supported by RM2 billion of tender book value,” he noted.

The construction and engineering firm’s revenue from its manufacturing sector increased by 16% quarter-on-quarter (QoQ), and 31% YoY, to RM9.9 million in its third quarter ended March 31, 2021 (3Q21).

Do noted cumulative sales for the firm’s nine-month period grew 10% YoY on higher sales volume and better selling prices.

He added that the construction wing recorded lower revenue of RM89.4 million for 3Q21, down 3% QoQ and 28% YoY, mainly due to slower construction activities.

“This is coupled with the continuous impact of the Covid-19 pandemic that resulted in more stringent standard operating procedures imposed by authorities and clients.

“Positively, longer-term prospects look encouraging, as the recovery phase is expected to follow on the improving business environment in FY22F,” he said.