STOCK FOCUS OF THE DAY
Protasco : Extending beyond road maintenance BUY
We initiate coverage of Protasco with a BUY call and an SOP-based fair value of RM1.33. Founded more than two decades ago, Protasco specialises in the maintenance of federal, state and rural roads in Malaysia. It is also engaged in construction, property development, engineering and consultancy, education, and trading/manufacturing of building materials and products.
Protasco is the largest of the three federal road maintenance concessionaires in Peninsular Malaysia. Via 51%-owned Roadcare (M) Sdn Bhd (Roadcare), it controls the central and eastern regions covering Selangor, Pahang, Terengganu and Kelantan, while its peers, private companies Belati Wangsa (M) Sdn Bhd and Selia Senggara Sdn Bhd are in charge of the northern region (Perlis, Kedah, Penang and Perak) and the southern region (Negeri Sembilan, Melaka and Johor) respectively. Based on our estimates, Roadcare has a 49% market share in terms of total annual billings of Peninsular Malaysia’s federal road maintenance concessionaires.
We project its FY18/19 earnings to grow by 24%/8% underpinned by: 1) strong outstanding road maintenance concession order book of RM4.2bil; 2) strong earnings visibility over the long term from the road maintenance concession which will last till FY2026; and 3) potentially new affordable housing projects.
Others :
Oil & Gas Sector : Impending equilibrium on lower US rig count? NEUTRAL
Plantation Sector : No excitement yet NEUTRAL
QUICK TAKE
Plantation Sector : News flow for week 16 – 20 October NEUTRAL
ECONOMIC HIGHLIGHT
Malaysia : Negative real returns for 9th straight month
NEWS HIGHLIGHTS
Takeovers & Mergers : MGOs in question
Hartalega : Higher capacity boost
Transportation & Logistics : ‘PSC should also be based on airport type’
Nationwide Express : Sees Airpak buy as growth catalyst
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