Friday 29 Mar 2024
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KUALA LUMPUR (Jan 26): Shares of Pretariang Bhd gained 11.63% in the morning trades after the firm secured a contract to provide Microsoft software under the “Master Licensing Agreement 2.0” (MLA) to all government agencies in Malaysia last Friday.
 
As of 10.16, Prestariang (fundamental: 1.95; valuation: 0.9) was up 18 sen or 10.47% at RM1.9 with 5.49 million shares done. 
 
With the current price, it has a market capitalisation of RM832.48 million.
 
In a note to client today, CIMB Research said it is surprised that Prestariang was chosen to be the exclusive LSP for the MLA2.0 contract. 
 
According to CIMB, the annual value of the contract may stood around US$45 million to US$50 million (RM162 million to RM180 million), or higher.
 
"Despite the company did not disclose the annual contract size for the winning, our channel checks with industry sources indicate that it should be around US$45 million to US$50 million (RM162 million to RM180 million), if not higher," it said.
 
"Assuming a 10% net profit margin for MLA 2.0 (software and training), MLA2.0 could boost Prestariang’s net profit by at least RM16.2 million or 3.3 sen earnings per share [EPS] enhancement," CIMB said. 
 
According to CIMB, the potential MLA2.0 earnings could be as much as 65% of the group’s expected 2014 net profit.
 
"In addition, we understand that there is no foreign exchange risk for the company as the US dollar to ringgit exchange rate would be based at the time of the order," it added.
 
Inline with this, CIMB raised Prestariang’s financial year 2015 and financial year 2016 earnings per share by 13% and 17% respectively to reflect the additional MLA2.0 earnings.
 
The revision also took into account the likely lower oil and gas training students this year in view of the current tough conditions in the oil & gas sector. 
 
CIMB projected Prestariang's net profit for financial year 2015 to stand at RM74.60 million on the back of RM273.5 million in revenue. The number is expected to grow steadily in FY16, with net profit RM84.81 million while revenue at RM311 million.
 
In an announcement to Bursa last week, Prestariang’s wholly-owned unit Prestariang Systems Sdn Bhd (PSSB) had received a letter of award from the Minister of Finance (MoF), to provide Microsoft software under the “Master Licensing Agreement 2.0” (MLA) to all government agencies in Malaysia.
 
"The contract is over the course of three years effective from Feb 1, 2015 until Jan 31, 2018," it said.
 
“MLA is an initiative by the MoF that is aligned to the strategic ICT thrust of the Government. The focus of MLA 2.0 is to provide a licensing framework to better manage the procurement and utilisation of software license, streamlined administration and the budgeting of software procurement.
 
“The outcome is to enable a Standard Operating Environment (SOE) to be adopted which facilitates Microsoft software procurement, usage, maintenance, support and management by all government agencies,” said Prestariang.
 
However, the group didn’t provide any details on the value of the contract.
 
(Note: The Edge Research's fundamental score reflects a company¡¦s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
 
 
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