A beneficiary of rising IT spending. Prestariang is an ICT (information and communications technology) service provider focusing on ICT training and certification, and software licence distribution and management. The Group currently offers c.40 certification courses from various technology and software vendors and organizations such as Microsoft, IBM, Oracle, CompTIA, Autodesk, EC-Council, Adobe and others. Its key customers are government agencies (e.g Ministry of Higher Education), which contributed 89.5% of the Group’s revenue of RM58.5m last year. By business activity, it derived 55.4% of FY10 gross profit from the ICT training segment and the balance 44.6% from software licensing. Future expansion plans. Prestariang intends to gradually reduce its dependency on government contracts going forward. It plans to expand its product offerings to include more in-house certification programmes, set up sales offices and training centres in three new locations within Malaysia in 2H11, widen clientele base from the Middle East region via partnership arrangements, and develop its own proprietary test and assessment centres with in-house proprietary procedures and systems in 2012.
- Strong start to FY11. Prestariang reported 1Q11 revenue and net profit of RM37m and RM11.3m respectively, a strong start when compared to its full-year revenue of RM58.5m and net profit of RM15.1m posted in FY10. Backed by the current outstanding order book of RM145.3m and new contract wins, we have projected net profit growth of 71.4% yoy to RM25.9m this year and 8.8% to RM28.2m next year.
- Subscribe for a 21% upside potential. We have arrived at our fair value based on sum-of-parts valuation method, after attaching FY12 P/E multiple on the earnings contributions from ICT training & certification (9x) and software licence distribution & management (8x). Our fair value for Prestariang – which has no listed peer that is directly comparable – translates to a market cap size of RM240m. Meanwhile, the Company has set a maximum dividend payout policy of 50%.
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