Friday 29 Mar 2024
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KUALA LUMPUR (Oct 24): Prestariang Bhd shares were up as much as 7 sen or 15.4% to 52.5 sen this morning, as analysts said the recent sharp fall in its share price was overdone.

Compared to its closing price on May 8, which was a day before the 14th general election, and up to yesterday, Prestariang shares have declined by 72% with some RM347 million in market capitalisation wiped out.

In a note today, Hong Leong Investment Bank Retail Research said the fall in Prestariang's share price towards near the initial public offering level was overdone and valuations are undemanding at 2.76 times its financial year ending Dec 31, 2019 (FY19) price earnings.

Meanwhile, CIMB Research opined in a note to investors yesterday that Prestariang's share price underperformance has been mainly due to concerns that the newly-elected government may not approve the group's National Immigration Control System (SKIN) project. Since 3Q17, Prestariang has so far recognised RM135 million revenue from the construction works for SKIN.

However, the research firm believes there is a good chance the new government would approve SKIN soon.

"It took Prestariang four years to obtain approval for SKIN from the previous government, and the due diligence on SKIN has already been done by the previous government.

"We believe SKIN is a national security project as the existing Immigration Department's 'MyIMMs' IT infrastructure network, built in the 1990s, is already outdated and there is an urgent need to replace MyIMMs with a new IT infrastructure with the latest technology," it said.

CIMB Research estimates, using a 6% weighted average cost of capital, SKIN's value to be around RM750 million, and since Prestariang owns a 70% equity stake in SKIN, this concession is worth RM525 million or RM1.08 per Prestariang share.

At 11.36am, Prestaring shares were up 7.5 sen or 16.5% to 53 sen, with 82.8 million shares changing hands, and the stock was the second most active counter on Bursa Malaysia

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