PETALING JAYA: Piling and foundation based Pintaras Jaya Bhd is well positioned to benefit from the pick up in Singapore’s construction sector, according to RHB Research.
The Singapore Building and Construction Authority has projected construction demand to range between S$25bil and $32bil (RM78.1bil and RM99.97bil) from 2023-2026 back to the pre-pandemic levels.
RHB Research said Pintaras would be supported by the strong pipeline of public housing projects, as well as healthcare development and infrastructure work, including the Cross Island mass rapid transit line, for which Pintaras has had previous experience.
“Pintaras has a sizable footprint in Singapore as about 80% of revenue is derived from its projects there,” the research house said in its latest report.
RHB Research pointed out that the group is not highly exposed to the outlook of mega projects in Malaysia.
Pintaras is in a net cash position as of Dec 31, 2021, which enables the group to take on larger jobs going forward.
Its construction order book stands at about RM320mil, of which Singapore accounted for 80% and Malaysia 20%.
The research house said the group has an average replenishment rate of about RM400mil in the past three financial years.
The operating profit of its manufacturing division is estimated to grow steadily to about 4% in the next two financial years.
This is backed by the robust demand from major customers such as Japanese paint product manufacturer, Nippon Paint, which forecasts a 5% to 10% revenue growth in 2022 in Asia, excluding China and Japan, according to the research house.
In terms of cost management, the group is able to cope with the rising raw material prices compared with its construction division as “it is able to periodically revise the pricing of its products based on the prevailing trends,” it added.
The research house did not make any changes to Pintaras’ financial years 2022 to 2024 earnings.
It also kept its target price of RM3.24 a share unchanged.