Maintain TP and HOLD call

PINT’s 1QFY23 headline net loss of MYR3m included non-recurring items totalling a negative MYR2m. Excluding this, MYR1m core net loss was below our expectation for MYR32m core net profit in FY23E. We maintain our forecasts pending an update with management. Our unchanged TP of MYR2.20 is based on 7x FY23E core EPS plus net cash (+ financial assets) of 84sen/sh end-FY22. Maintain HOLD.

Losses at the MY construction ops

Group revenue was down 6% YoY (-10% QoQ) as construction billing was weaker by 12% both YoY/QoQ, while manufacturing revenue (12% of total) rose 69% YoY (+1% QoQ). Construction however posted a pretax loss of MYR3m due to losses in the MY ops which more than offset profit in the SG ops. The former came from recognition of foreseeable losses for some ongoing projects due to higher construction (material, energy and labour) costs and low productivity.

Expect a difficult operating environment for MY ops

Management expects a difficult FY23 for its MY construction ops with headwinds including volatile raw material prices, and high energy and labour costs (plus continued labour shortages). Prospects for its SG ops are better with more construction projects in the pipeline but this would be offset by high construction costs and intense competition for new jobs, leading to razor thin margins. PINT expects better profitability in 4QFY23 on higher job opportunities and moderating of operating costs.

MYR350m o/s order book to provide for near-term

Outstanding order book was MYR350m end-Sep 2022 (MYR240m end-Jun 2022) including job wins in YTD-FY23. PINT expects group earnings in FY23 to be markedly down from FY22. Our unchanged forecasts meanwhile imply flattish recurring earnings YoY.

Source: Maybank Research - 24 Nov 2022