Tuesday, January 19, 2010

Why I Like Pintaras Jaya

Pintaras Jaya is a construction holding company that undertakes piling contracts, civil engineering, and building construction works.The company designs, constructs, and installs piling and foundation systems, such as cast-in-place bored piles, driven piles, micropiles, and hand-dug caissons. It also involved in the design and construction of earth retaining systems including construction of building basements; and stabilization of earth slopes for road works and general earthworks. What escapes a lot of people is the company has diversified successfully into metal can manufacturing and plastic packaging.

Cyndi Wang

The company recorded revenues of RM165.4m in the fiscal year ended June 2008. Its net profit was MYR23.8m in fiscal 2008, or a net EPS of 29.8 sen. For the year ended June 2009, the company recorded revenue of RM130.3m, a slight drop owing to depressed economic conditions, but still managed to eke out a net profit figure of RM11.4m or a net EPS of 14.3 sen. Construction activities contributed about RM14.6m to pretax profit whilst manufacturing activities contributed about RM5m. This compares with corresponding figures of RM24.1m and RM6.3m respectively for FY2008.

What was key was that the final quarter, or the period Apr-June 09, saw net profit contribution of RM6.238m, which was more than half of the entire 12 month period. The excellent results carried on in the first quarter of the new fiscal period. For the quarter ended Sep 2009, net profit was RM6.288m. It appears that the company has regained traction. If we were to annualise the results, we should be looking at a net EPS of 24 sen for the year ending June 2010.

Pintaras Jaya is a unique company in a dog-eat-dog industry. Its very conservatively managed, and extremely cash rich, you'd think they are in the 4D gaming business. Just their cash balance on hand, if you add their liquid short term investments, comes to RM93.6m, or a net cash per share backing of RM1.17, unbelievable isn't it. Why no one is covering the stock anymore??? At a share price of RM1.60, it literally meant that 73% of the value is in cash already (how big a font can I make this!!!).

Paid Up: 80m shares
NTA: RM2.19

Distributable retained earnings stood at RM96.76m. The pronounced market activity over the last week led me to conclude that the timing to enter the stock could not have been better. A share split and/or a lucrative bonus should be in the offing because the company has always been criticised as very good and prudent, but lacks liquidity.

Pintaras Jaya made the coveted list of Forbes Asia's fourth annual 'Best Under A Billion' companies in 2008. Their revenue dipped in 2009 and the company did not make it on the list but as things look, I am pretty sure they will back on the list in 2010.

Dr Chiu Hong Keong, a Malaysian, aged 54 is the founder member of Pintaras Jaya Berhad and was appointed as the Managing Director of the Company since 23 November 1989 and elected as the Chairman of the Board on 18 October 1994. He is a member of the Risk Management Committee. He graduated with a Bachelor of Civil Engineering degree (1st Class Honours) from the University of Auckland, New Zealand in 1977 and obtained his Doctorate of Philosophy degree in Engineering from Monash University, Australia in 1982. He worked as a Geotechnical Engineer with the Victorian Country Roads Board of Australia for a brief stint before returning to Malaysia to join Pilecon Engineering Bhd in 1982 as a Geotechnical Engineer. In 1983, he joined Ho Hup Construction Company Sdn Bhd from 1984 until 1989. He holds a total of 45,636,898 shares (direct and indirect) in Pintaras Jaya.

Name of Shareholders Shares
1 Pintaras Bina Sdn Bhd 29,016,158 36.24%
2 Chiu Hong Keong 11,407,860 14.25%
3 Khoo Yok Kee 5,212,880 6.51%
4 Khoo Keow Pin 5,041,652 6.30%
5 Alliancegroup Nominees (Tempatan) Sdn Bhd
(Pheim Asset Management Sdn Bhd for Employees Provident Fund) 3,000,000 3.75%
6 Chua Hock Chin 1,724,000 2.15%
7 HSBC Nominees (Tempatan) Sdn Bhd
(HSBC (M) Trustee Bhd for Singular Asia Flexible Fund) 1,063,600 1.33%

How do you value such a gem? RM1.17 of the share is in cash, which mean at RM1.60, the company is costing 43 sen only. Let's look at the net EPS again in 2010, its going to be 24 sen, less than 2x PER going forward? I am willing to ride this one for a long time because something is bound to happen very soon:
- the controlling shareholders should just take this company private, I mean you can literally put out a G.O. up to RM2.40 and still be way ahead with nearly RM100m in cash
- the company should be looking for acquisitions to expand its platform as it is being way too conservative, there should be no reason to keep more than 20% of your market cap in cash
- at current valuations, the owners would be very silly to even want to sell any shares, hence it is timely to try and improve liquidity and reward all shareholders, i.e. do a split and a 1-for-1 bonus, which the company can easily afford and should do

No matter how you cut it, this is a gem of a company that can buy and lock up. They have proven to be highly prudent and has managed to navigate the treacherous 2008 with flying colours. Sometimes when you find gems, you have to hold like forever waiting for something to happen. That is why the stock only came up on my radar when the stock price started to spike up - we will never be able to catch the bottom, what is important is that something seems to be brewing and I like the smell of it.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

p/s photo: Cindy Wang


Zaini said...


interested to know how do u feel about pintaras jaya now?

super thanks.

Earl Finnegan said...

Hmm I might need to contact this company. I need some work done involving micropiles.