KUCHING: Pestech International Bhd’s (Pestech) second half of the financial year 2013 (2HFY13) is expected to be more robust as compared with its 1HFY13, driven by higher billings from local projects in the Sarawak Corridor of Renewable Energy (SCORE) region and Johor.
To note, Pestech’s 1HFY13 saw its profit before tax (PBT) surged 81 per cent year on year (y-o-y) on the back of a 28 per cent increase in revenue due to higher billings from local projects in the SCORE region and Johor. In addition, Pestech’s 1HFY13 earnings before interest and tax (EBIT) margin rose to 16.4 per cent from 12.3 per cent in 1HFY12.
RHB Research Institute Sdn Bhd (RHB Research) stated in a recent note that despite the lower annualised PBT, it is expecting a stronger 2H.
It highlighted, the better results were attributable to higher billings from local projects in the SCORE region and Johor.
“We see significant improvements in Pestech’s second quarter of FY13 (2QFY13) results, with revenue of RM41.6 million and net profit of RM5 million.
“The quarterly results were stronger as some of its projects had entered the delivery stage which allows the company to book in its billings,” it explained.
RHB Research added, besides strengthening its foothold in the existing markets, Pestech is also looking for opportunities in new markets. To date, it has tendered for over RM1 billion worth of projects.
The company has taken part in a tender for substation equipment supply for five substations in Myanmar.
The research firm further said Pestech has also obtained approval from the National Grid Corporation of the Philippines as approved vendor to participate in bidding projects.
In addition, Pestech is partnering with Thai local partners to participate in tenders for the Metropolitan Electricity Authority (MEA) projects in Thailand.
Pestech has proposed a private placement of up to 10 per cent of its issued and paid-up share capital. In addition, the company has in place a share grant plan (SGP) of up to 15 per cent new shares to be granted and issued to directors and employees of Pestech.
“Assuming a full take-up of the SGP, this would add another 12.9 million shares into its enlarged share capital to 98.98 million shares. The proposed 10 per cent private placement would be based on the enlarged share capital of 98.9 million shares,” RHB Research noted.
Based on the indicative issue price of RM2.25 per placement share and the issuance of up to 9.9 million shares, the proposed private placement is expected to raise about RM22.2 million and the enlarged share capital would increase to 108.6 million shares, the research house opined.
“The proceeds would be used as working capital and to fund its capacity expansion plan as the company has recently inked a deal with ABB Malaysia Sdn Bhd to produce switchgears,” explained RHB Research.
The research house concluded by stating, “We continue to like Pestech for its bright growth prospects in the local and overseas markets, supported by its strong orderbook. However, the company’s proposed corporate exercises are expected to dilute its earnings per share by seven per cent and 27 per cent respectively for FY13 forecast and FY14 forecast.”