Prestariang 柏斯達亮 (PRESBHD) FY2013 Q4 Update

Prestariang just released its 4th quarter result for financial year 2013 la ~~

A slightly better result in terms of net profit compared to Q4FY12. 

Revenue increased 25.5% y-o-y but net profit only able to increased around 3.4% thanks to lower gross and profit margin. Furthermore, a higher administrative expenses was spent on education arm for the newly open university is also another cause that contributed to lower net profit margin. 

Its training and software distribution especially for those program like 3P and IC Citizen have some cyclical effects which depends on the institutions schedules and experience high classes conducted during semester breaks. For the past 1 year, the training arms conducted more classes during first and third quarter.

In terms of balance sheet, it still looks good. Cash balance on the rise with RM26 mil is put into short term investments. Borrowings is reducing and consider negligible while retain earnings keep improving. Full year ROE is 43.4 given its light asset structure. 

For the full year of 2013, ICT services and software distribution actually improved a lot with 33.2% growth. The new university which opened at the mid of last year failed to lift up the expectation as the result of poor showing of student intake and also additional marketing costs. However, the management team did point out last time that they target to breakeven for the education arm for financial year 2014. This will at least help to increase the overall net profit assumed the ICT services and distribution remain strong. 

Apart from that, the management also did point out in the notes that they remain positive on future business contribution from the oil & gas sector after realized the profits from 2 training courses conducted earlier to oil & gas sector. 

Lastly and as usual 3 cents dividend was declared which bring up a total 12 cents dividends for full year 2013, 2 cents increases from 10 cents last year. 

And what's more. A bonus issue of 1 to 1 is being announced too. This will probably help to increase the share liquidity and improve the institutions involvement in future. 

Overall, Prestariang still looks good, just a little bit pricey now. Haha. A PE of 17 based on today price of Rm3.29. 

Prestariang (PRESBHD) update

CIMB investment bank published a report, Training for a Major Leap yesterday about Prestariang Berhad. There were few positive updates from the CEO too.

1) The existing oil & gas school is already operating at full capacity. The group is seriously looking to scale up the oil & gas training business which is another good engine growth. Currently training 240 students with RM13k per students which is equal to around RM3 million revenue. This speaks the attractiveness about the education industry in terms of revenue and profit margin.

2) The group finalised its new distribution terms with Autodesk. Thus, the group able to distribute the software to private sector as previously the group only able to deal with public higher education institutions. This will be another positive earnings transparency as the management is looking to double the size of the business to RM60m in 2-3 years' time. The gross margin of software licensing is believed to be around 5-30%. 

3) Jan student intake for UniMy was strong but did not disclose any enrolment numbers. The management target to breakeven in FY2014. This is good as the group spent around RM6 mil in FY2013 for administration purpose. This will improve the bottom line of the group's financial next year.

4) Else way, the group also looking at regional expansion which have synergies with its core business. Well, this is a long term plan. Nothing much to talk about at this term.

In short, everything seems to be going well for Prestariang. Good company with room for growth. The price may be little bit high now but the price will probably increases along with the result in future. Waiting opportunity to further invest into it.

In separate note, I invested a small portion in Dutch Lady yesterday as things are looking good in Dutch Lady. This stock will serves as my dividend stock. In fact, all my holdings except Scientex give me a dividend yield of >5% to meet one of my targets to achieve certain passive income from the dividends. 

Scientex & Prestariang CEOs' 的宏志 !!

Last week, coincidently there were two separate interviews with Prestariang Berhad's CEO, Mr Abu Hasan Ismail and Scientex Berhad's CEO, Mr. Lim Peng Jin which caught my attention. Both aim to double their respective companies' market capital in few years time!!

Based on the interview and news, Mr Abu Hasan Ismail aims to reach market capital of RM1billion in 3 years time. Prestariang current market capital is around RM545m. That's  double of what it's now to reach RM1b status. By using simple Rule 72, the group need to achieve annual growth of around 24% for 3 consecutive years in order to reach this figure. The group's growth strategy lays on its newly oil & gas segment which currently as he mentioned only contributed around 4% to the group's revenue. The group is looking to secure more contracts in this field. Apart from that, he also aims to recognise revenue streams from talent management and UniMY segments. 600 students are what they need to break-even for its UniMy business at this stage. So, 3 segments, 3 growth engines to double its market capital in 3 years time. Go for it ~

Another interview is from Scientex Berhad's managing director, Mr. Lim Peng Jin. Scientex berhad is far older company than Prestariang berhad. In fact, the group celebrates its 45 years old anniversary this year by distributed special dividend too. He aims to double the group's market capital in 5 years time. (p/s: Scientex's size is double of Prestariang currently, growth may not be so extensive as the latter.) Scientex's growth of course lays on its 2 core businesses, manufacturing and property segment. Under industrial packaging, its stretch film production is the world third largest in terms of production capacity. For its consumer packaging, the group is undergoing extension expansion via acquisition and capital expenditures to increase the output. For its property division, the remaining RM5.2b GDV can last for 10 years with 60% of it targets at affordable homes while the remaining at high end housing segment. Everything put into the plan, Scientex growth is more focus on organic growth rather than diversify into new segment. 

So, both CEOs have their minds set for growth. Sometimes, it's really hard to evaluate the management team of one company on paper. On paper, we may only evaluate them through share buy back, decision they made in big occasions, their salaries and their statements in annual reports. But as a shareholder, of course you want to invest in companies where the management team able to produce fantastic result and bring a decent returns to the shareholders years after years. 

In Scientex & Prestariang, I'm happily invest my money on them and have a good sleep every nights knowing they will work hard to produce good result years after years for the company. Of course as a shareholder, you need to evaluate the company performance every quarters to check whether the progress in on par on what you expected. Take a bold decision to sell it if the performance against what you expected. Never fall in love on them :)

Prestariang 柏斯達亮 Q3FY13 High High High

Prestariang Berhad just released its latest quarter report this evening and guess what? It records all time high quarter result in terms of revenue and net profit. That's really high man .. 

In terms of revenue, the group records similar result with corresponding quarter last year. But in terms of profit before tax, the group records a 26% improvement, that's the group highest record so far. This boast its quarter EPS to 5.61 cents too. The increase is mainly caused by increase revenue from its ICT training & certification which help to offset the lower revenue from its software license distribution. 

On the other hand, the education segment as expected is still suffering loss close to RM2m. Anyhow, it's still in initial stage and it's a long term project to bring recurring income to the group in future. 

By comparison with preceding quarter, both segments also record improved result. Management team stated that this was due to higher amount of classes being conducted during the quarter for 3P program. Furthermore, the training and certification carry higher gross profit margin if compared to license distribution, this caused a higher bottom line result. But, they did specify that the 3P and IC Citizen program have seasonal factor as the execution of the programs are based on pre-schedules and will experience peak during the semester breaks. This will probably cause certain low in some quarter due to lower class conducted which in turn lower revenue recorded during the respective quarter. 

In terms of balance sheet, due to the light asset nature, ROE for the group remains high. Low borrowings and high cash in hands. Retained earnings are almost 3 times of share capital. Perhaps a chance of bonus issues to increase the share liquidity? Little bit greedy since the management is quite generous on giving dividend already :)

Apart from that, the group also has RM26m short term investments. Based on my email enquiry to them earlier, it's the group's investment in 2 asset management and the objective of this is to maximize the company's profit and avoid from idle cash. That's a good move to avoid to just let the cash sit comfortably inside the bank. 

Glad to see that 9months EPS is 14.25 cents compared to 12.22 cents last year. Assume a full year EPS will be around 19 cents, this applies a PE of 13.15 based on RM2.5 share price. I foresee limited growth unless revenue from the oil & gas training and university segment become more certain and valid. But it's still good as the group diversify into new business. 

Else way, the management did not provide any update on the 2 newly development programs Smartgreen (green IT principles) and PREC (English language training). Perhaps still in the progress on marketing. 

3.5cents dividend is declared. Another quarter dividend like an income received every 3 months

Prestariang new acquisition and new contract

Prestariang made a headline on last Thursday by making a double announcements. 

The first announcement was the acquisition of Time Out Skills Academy Sdn Bhd at a 80% equity interest with total purchase consideration of RM0.64m. The purchase is to be wholly funding by cash. With a cash balances of RM34m at the date of 30th June 2013, the group will have no problem for this internal funding. According to the announcement, the acquisition is to help the group focus on providing skills training programs to the oil & gas industry. Finally, the group has officially has the capacity and medium to provide training to the oil & gas industry. 

It was followed by a contract by the Yayasan Peneraju Pendidikan Bumiputera to provide skills training certification for 240 students. The total programme cost is around RM2m with a training period of 2 years. More importantly, it also stated that the contract is subject to ANNUAL renewal for future intakes, subject to satisfactory performance. Thus, there will be more contracts and higher students intake if the programme performance is good. This will provide a recurring income to the group in future. Given the turnover of around RM110m recorded in FY2012, the RM2m contract will marginally increase the group's revenue for this coming 2 years. But, it's always a good start since this is a new segment for the group. 

It's believe that the group is going to announce its 3rd quarter result on this coming Thursday (20th Nov). The revenue probably still count on its core business of ICT training and software license distributor. Its new segment of university business probably still incurs some loss after spending around RM2.0m on marketing expanses to promote its newly launched university at H1FY13 and it turned out to have low students intake. Management team still have lots of things to do to improve the situation

Anyway, it's good that the group is diversify its business into university and training platforn for oil & gas industry apart from its core business to further enhance shareholders' value :) 

Prestariang, go go go 

~ Enquiry on Prestariang Berhad (PRESBHD) ~

I sent an email to Prestariang Berhad's (PRESBHD) investor relation team regarding some of my dummy questions and glad that they replied me in few days time though I just yet another little minor investor. 

Below are my questions to them and those sentences in red font are their replies. 

It's noted that Prestariang is in the progress to setup a permanent university which provides a steady recurring income to the group in future apart from its 2 core businesses. Some news reported that the setup of the permanent university need around RM200millions capital. I'm here to send an email to enquire what is the step and funding method Prestariang Berhad takes to allocate this RM200millions capital. WIll it through borrowings or right issue to raise capital? Will the fundings affected the dividend policy? 

The new campus is in  the planning stage whereby RM200 million is an early estimation of the development cost (as per our release dated 31 Jan 2013). It may be lower depening on the concept and design of the campus. of which the sources of fund is yet to be decided. At present, there are a few financial alternatives for the new campus such as lease to own, direct lease or own development through fund raising etc. The management team is looking for the best and cheapeast alternative as Prestariang’s business model is focusing on Asset Light + Low Gearing concept. As such, the management will ensure decision make for the funding and alternative will NOT IMPACT Prestariang’s dividend policy in the future. We will announce the business model of the campus when the time comes.

Apart from that, another question I would like to ask is that will it be any effect of the election or government change to Prestariang business nature? As majority of Prestariang Berhad's contracts are from the government bodies. (Sounds like a dummy question as they definitely wont say yes anyway :) .. )

Since Prestariang started 10 years ago, we managed to win and continued to secure projects from the public sectors despite the change of various ministries in particular MOE and MOHE.  We are confident that our products and businesses are resistance to political change as re-skilling and up-skilling of manpower to meet the demand of the market is a NEED regardless of which ruling party. As such, we will survive under any government and whoever minister being appointed.

On the other hand, it's noted that Minister of Finance and Kumpulan Modal Perdana had disposed quite a number of shares through open market for the last 2 months. It's worrying for the minor shareholders like me that the substantial shareholders are disposing their shares in Prestariang Berhad. 

Kumpulan Modal Perdana is the fund management arm for the Ministry of Finance Malaysia. Similar to any fund manager, their main objective is to invest in a portfolio of business in return for either capital or dividend gains. As a publicly traded company, we will not be able to stop investors from their buying and selling activities. We would however continue to educate more investors about our company through IR and PR activities. Hopefully, we will have more investors like your goodself that believes in the work we do and will stay with us on long term.

In case you all have any questions to ask Prestariang Berhad, just drop an email to inquiry@prestariang.com.my. Their efficiency are quite good. 

~ prEstArIAng bErhAd Q412 ~

Prestariang, the politic related counter I am following all this while had just released its latest 4th quarter report fortnight ago ..

From the report ..

• 4th quarter revenue dropped around 25% q-o-q. Consequently, profit before tax dropped 12% compare with same quarter previous year. EPS for 4th quarter stayed flat at 4.72sen. The dropping in revenue was mainly due to lower revenue in the ICT training and Certification, Project 3P where it had been fully delivered in the preceding quarter. 
• Expected the price can goes up to Rm1.3 based on the EPS of 16.94sen times PE ratio of 8. 
• For full year 2012, it recorded an improving result with around 17% profit before tax growth and 5% EPS growth. Profit margin was improved to 33.84%. Higher profit margin was due to contribution from IC Citizen Certification project. 
• At its balance sheet, it has RM61m cash which equivalent to 27.86sen cash in hands per share. Borrowings are low at RM1.6m. Retained earnings recorded 33.6% growth. Full year ROE is high at 46.73. 
• Full year dividends is 10sen per share compare with 8.0sen per share in year 2011. 
• In terms of segment review for year 2012, ICT training and certification segment had contributed 30% of its revenue from 25% in previous year. 
• Prestariang Systems sdn bhd, the main subsidiary of the Group will enjoy full exemption from income tax on its statutory income from pioneer activities until June 2015. This will at least help to maintain part of its earning for few more years. 

Prestariang Berhad performed share buy back at month of Feb at a market price region of RM1.02~1.04. Perhaps these price will served as the supportive price to buy in. I still fond of this company for its attractive dividend yield, earning growth from the new university segment, high cash with low gearing ratio and low PE but there is a risk with its connection with the government as the contracts may not sustainable if the opposition parties form the government 

~ Prestariang 柏斯達亮 (PRESBHD) AnAlysIs ~

The first time I came to know Prestariang was during his IPO launching back to July 2011. When I glance at its business portfolio, my first impression was it's a boring business nature. However as time goes by, it proves that boring is a very good investment. 

Prestariang's 2 main core business activites are ICT training & Certification and Software Licence Distribution & Management. 

For the training segment, Prestariang provide both basic and professional Information Communications Technology (ICT) training and certification examination at the end of the course while software licence distribution segment is just a follow up to distribute and manage the product licences. 

In simple term, Prestariang offers clients/companies a one stop package that provides training, certified them and also get paid for the product licences. That is. Their business plan is just that simple to understand which I clarified them as boring last time Haha. So, I missed out a good company. 

Looking back at its past 3 years result, revenue, profits and earning per share are nothing but just keep increasing. That shows how good its profit stability. 

For the 9-months FY12 period, it records an EPS of 12.22 cents, expect it can achieves a full year EPS of 16 cents. Base on today price of RM1.13, its PE ratio is around 7. Profit margin is exceptionally high in the region of 25-30%. ROE is also high due to its low net asset per share. 

As of its balance sheet, the RM35m cash in hands should be more than enough to cover its borrowings of RM2m. Current ratio is high at 4.8 which demonstrates its good liquidity. The total of retained profits and share premium are triple of the share capital, thus it's mathematically able to issue bonus share to increase the share market liquidity as its net asset per share is higher than its share par value. 

Portions of the cash in hands come from the IPO listing. The utilisation of IPO proceeds is only 50% of the RM19m it raised through IPO. As of its high cash in hands and retained profits, it should have no problem to gather money for expansion expenditures. Currently, Prestariang is in the midst of setting up its first computing university in Malaysia marking the first in Malaysia to offer higher education on specific ICT fields to have a sustainable future other than its 2 core business segments. 

Apart from that, the other thing I like the most of Prestariang is its generous dividend payout. It does not have any dividend policy currently, but it declared more than 50% of its net profit for dividend. For the cumulative Q312, it had declared a total of 7cents dividend. Expected there is another dividend payout for its Q412 in the region of 2-3 cents which translated into dividend yield of 7-8% based on today price RM1.13. To make it more exaggerating,it paid the dividend every quarters. It's so nice for you to receive a passive income every 3 months. 

Majority of the contracts being award to Prestariang are from government. It also starts to develop its own training and certification programme to cater international demand. One of it is the IC Citizen programme that able achieved sale at Brunei and also in middle east countries. 

Its CEO, Dr Abu Hasan Ismail who holds numerous academic certification is also the founder of Prestariang Berhad. He has great exposure to ICT development and teaching. Besides that, he was one of the founders of Multimedia University. As for the Chairman, Dato Mohamed Yunus Ramli Bin Abbas, this CV even longer. He had 25 years service at Motorola, executive officer for Encorp Group (Encorp Media, NTV7) before became the CEO for Celcom Berhad. He also established NuSura Technologies and is now the executive director of it. Besides, he also holds numerous chairman position at different government bodies. I believe these two gentlemen will even help Prestariang secures more contracts from the government. 

Now, lets take a look at the list of top 30 shareholders of Prestariang as at May 2012 ... 

Do you spot anything on it? Do you see there is quite a number of unit trust and funds in the top 30 shareholders? Seem like the unit trust and fund managers have great confidence on Prestariang. 

So, if you're investing your money on above stated unit trusts or funds, why not directly invest in Prestaring at the stock exchange? As you can get around 8% dividend yield instead of paying 3-5% service charge and 1.5% management fees when you investing in unit trust?

You know the calculation