Hot Stock Pintaras climbs 4%, RHB starts coverage

Hot Stock Pintaras climbs 4%, RHB starts coverage
Business & Markets 2013
Written by Charlotte Chong of theedgemalaysia.com
Wednesday, 31 July 2013 11:08

KUALA LUMPUR (July 31): PINTARAS JAYA BHD [] rose 4% to be one of the top gainers across the bourse in morning trade after RHB Research initiated coverage on the CONSTRUCTION [] company.

At 10:29am, Pintaras shares were up 20 sen to RM5.19 with a trade volume of 317,000. The counter was earlier traded at a high of RM5.30.

RHB Research which has a "buy" rating and a fair value of RM7 for Pintaras, said it believed Pintaras is in “the right place at the time” as the development of large-scale infrastructure, property, and oil & gas projects in Malaysia shift into higher gear.

In a note today, RHB said Pintaras, a piling specialist, is the best in the trade.

"Pintaras is the best in the trade in the local market by virtue of the superb margins it has achieved.

"Apart from good piling rates on chronic capacity constraints in the market, Pintaras’ margins are boosted by its full range of piling machines, tools and accessories – which reduces the need for outsourcing – and its in-depth knowledge of ground conditions that allows it to pick and choose the best jobs to bid, and putting in the winning bids for them," RHB said.

The research house said Pintaras has a strong competitive edge against peers and, contrary to the “intuition” of the investing fraternity, the industry has very strong defence against potential new entrants.

“Leveraging on RM100 million capital expenditure, Pintaras is hopeful to double its outstanding orderbook to RM300 million at some point in the near future from RM150 million currently.

“We project Pintaras’ net profit growth to shift into a higher gear at a CAGR (compound annual growth rate) of 18.7% between FY12 and FY15 vis-à-vis 10.5% recorded in FY12," RHB said.