The company’s strong net cash position of RM142m as of 3Q22, and commitment in issuing dividends also made the counter attractive
by S BIRRUNTHA / pic source pintaras.com.my
PINTARAS Jaya Bhd is well-positioned to ride on the construction uptrend in Singapore and the upcoming rollout of mega projects in Malaysia, according to MIDF Amanah Investment Bank Bhd (MIDF Research).
The bank noted that Pintaras’ strong net cash position of RM142.17 million as of the third quarter ending March 31, 2022 (3Q22), and commitment in issuing dividends also made the counter attractive.
“We are positive on Pintaras Jaya as it is well-positioned to ride the construction sector uptrend in Singapore, while in Malaysia, the group is ever ready to pounce on piling and foundation works for mega projects such as the Mass Rapid Transit Line 3 (MRT3) that will be rolled out by the government soon.
“Pintaras Jaya’s strengths lie in its vast experience, large fleet of machinery and its financial strength in Malaysia with zero gearing,” MIDF noted in a report on the construction-related contractor yesterday.
MIDF likes Pintaras’ steady recurring income from its metal container manufacturing business and the group’s commitment to pay dividends every year.
The bank has initiated its coverage on Pintaras Jaya with a ‘Buy’ recommendation based on a target price (TP) of RM3.14.
The valuation is pegged on its four-year mean price-earnings ratio, reflecting the group’s current business structure post-expansion to Singapore.
Pintaras entered the Singapore market after fully acquiring the Pintary Group in September 2018, at a time when the Malaysian construction sector was subdued due to the first change of government since independence which led to infrastructure projects being reviewed, leading to cancellations or delays, on top of a weak property market.
The group’s operations in Singapore now generate circa 80% of Pintaras’ revenue annually.
“We expect the group to benefit from the growth of construction demand in Singapore, projected to be between +12% and +23.6% in calendar year 2022 (CY22) until CY26 as compared to CY21 figures,” the MIDF noted.
The bank also highlighted that Pintaras sits on a cash pile of RM142.17 million as of 3Q22 after deducting all its debts.
The strong financial situation enables the group to make meaningful acquisitions or business expansions, such as what it did in 2018 with the Pintary deal.
“Management guided that the huge cash pile it is sitting on enables it to jump on any opportunities or new ventures that may arise, though it remains very selective in ensuring the business venture must be a right fit and be able to add value to the group,” MIDF added.
As of Dec 31, 2021, Pintaras reported an outstanding construction orderbook of about RM320 million.
Taking into account work done and the contracts won recently, it estimated that the group’s current outstanding orderbook stood at between RM350 million and RM400 million.
Pintaras’ management’s orderbook replenishment targets were RM400 million for financial year 2022 (FY22) and RM500 million for FY23.
Unlike other construction groups, Pintaras is in the piling and foundation business, which generally has a contract tenure of about one and a half years or lower, meaning that the group relies heavily on new jobs every year.
“So far, it has managed to meet its replenishment targets consistently.
Management’s higher target for FY23 reflects its optimism, taking cue from the brighter prospects in Singapore and the upcoming revival of the sector in Malaysia,” it noted.