Prestariang ‘pleasantly surprised’

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prestariang_4Feb15_theedgemarketsKUALA LUMPUR: Talent and technology outfit Prestariang Bhd (fundamental: 1.95; valuation: 0.90) expects to see better growth in its earnings for the financial year ending Dec 31, 2015 (FY15) compared to the last, following its appointment as the sole Microsoft licensing solutions partner (LSP) by the Ministry of Finance (MoF) two weeks ago.

“We are pleasantly surprised that they [MoF] awarded it [wholly] to us,” Prestariang chief executive officer Dr Abu Hassan Ismail (pic) told The Edge Financial Daily in an interview.

“We thought they would award it to [at least] three [LSPs],” he added.

Prestariang’s wholly-owned unit Prestariang Systems Sdn Bhd on Jan 21 received the letter of award from the MoF to provide Microsoft software under the “Master Licensing Agreement 2.0” (MLA) to all government agencies in Malaysia.

The contract is for three years and will take effect from Feb 1, 2015 until Jan 31, 2018.

Apart from Prestariang, there are eight other qualified Microsoft LSPs in the country. However, Abu Hassan noted that of all the nine LSPs, Prestariang is the only one that is also a certified partner with competency in learning solutions (CPLS).

“That is an advantage for us,” he said.

RHB Investment said in a report dated Jan 26 that the latest contract could potentially bring in up to RM200 million revenue per annum, based on the combined income of the seven companies that were involved previously. The research house also upgraded Prestariang to a “buy” rating and expected 2015 to be a record year for Prestariang.

“If you want to consolidate, it’s best to only have one [LSP],” reasoned Abu Hassan, adding that there are 24 ministries, 74 agencies and six local authorities, which would be under its contract coverage.

The job includes licensing and technical support, software asset management, product awareness and technology updates, technical workshops and deployment guide.

To date, Prestariang has trained and certified over 250,000 individuals, said Abu Hassan.

Besides the improved prospects in its software and services segment, Prestariang also expects 2015 to be the turnaround year for its education arm — University Malaysia of Computer Science and Engineering (UniMy), he said.

UniMy, which has been incurring an average loss of RM1.6 million every quarter since its commencement in 2013 according to analysts, currently has about 100 students and is expecting another 100 in its first intake in February.

Things are already looking up for UniMy, which on Nov 26 last year received a letter of intent from Majlis Amanah Rakyat (Mara) that would see Mara placing sponsored students in UniMy to pursue higher education.

Mara would eventually acquire a 30% equity interest in Prestariang Education Sdn Bhd and “is just waiting for the regulatory approval,” said Abu Hasan.

The current protracted slump in oil prices notwithstanding, Abu Hassan said there is still demand for skilled workers in the oil and gas (O&G) industry, which UniMy intends to fill.

“And instead of working with everyone in the industry, we are only working with the player that can guarantee jobs for the students we train.”

Going on that strategy, Prestariang inked a memorandum of understanding with MIE Corporate Holdings Sdn Bhd on Nov 3 last year to form a joint venture to supply local and foreign manpower to the O&G industry, including Petroliam Nasional Bhd’s RM60 billion refinery and petrochemical integrated development project.

For its nine months ended Sept 30 last year, its net profit was down 41.07% year-on-year to RM18.47 million from RM31.35 million, due to lower revenue from its software and services, and academy segments — which saw its revenue drop 25.3% to RM66.49 million from RM88.91 million.

The company is expected to announce its fourth-quarter results soon. Its counter closed 2.13% lower at RM1.84 last Friday, giving it a market capitalisation of RM890.56 million.


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This article first appeared in The Edge Financial Daily, on February 4, 2015.