With all this mega infrastructure projects in line, it will be very worthwhile to take a look at the material supplier for all this projects. Amongst all the material supplier for all this mega infrastructure project, I would like to highlight on PRESTAR RESOURCES BERHAD, a major supplier for highway railings.
Let's have a quick look at the recent price movement for Prestar
Prestar had been consolidating at the range of RM 0.60 for the past couple of month, however, the counter had seen some new fresh volume that is signifying a growing interest in the company in the coming days. Prestar will be looking set to break above RM 0.65 with a huge volume and will be looking to put a foot hold at RM 0.70.
Prestar on hot rail
As highlighted in my earlier coverage, Prestar primarily involved in:
- Slitting & shearing of carbon & stainless steel mother coils into slitted coils / sheets for automotive, electrical & electronic, office equipment, metal stamping indsutries
- Roll forming of carbon steel pipes and hollow sections
- Roll forming of stainless steel pipes & hollow sections
- Manufacturing of steel flat bars, steel purlines
- Manufacturing of wheelbarrows and platform hand trucks
- Manufacturing of steel shelving & pallet racking and other storage equipment
- Manufacturing of highway guardrails
Prestar had continue to display a growing volume, signaling the bullish demand in the material supplying for huge infrastructural projects. However, the lower contribution on the earning per share might be attributable to a higher operating cost in 2014, but we believe that the management will be taking adequate steps in preserving the earning of the company which will be displayed in the later quarter for the financial year of 2014.
For the 1Q of 2014, Prestar NTA is standing at RM 1.13, which is still at a discount if we had look into the land and properties that the company is owning, which is highlighted in my earlier post - Prestar - Railing on Hot Roads.
Coming up Catalyst in 2014
2H 2014 will see many groundbreaking event for many highway projects that will be built across Klang Valley. A total of 6 highways with a total project value of almost RM 20 billion will be expecting to start work in the 2H of 2014. Amongst them in the line will be
- Kidex (Kinrara - Damansara Expressway) - RM 2.42b, length 14.9km
- EKVE (East Klang Valley Expressway) - RM 1.55b, length 39.5km
- WCE (West Coast Expressway) - RM 5.04b, length 233km
- SUKE (Sungai Besi - Ulu Kelang Expressway) - RM 4.18b, length 31.8km
- DASH (Damansara - Shah Alam Expressway) - RM 4.3b, length 23km
- DUKE extension (Duta - Ulu Kelang Expressway) - RM 1.18b
Which that many highway that are going to kick start in the 2H of 2014, Prestar will be looking to see a higher book order and revenue in the coming days. While they had secured the WCE contract, the other notable contract will be from EKVE and SUKE that will give them yet another double strike on the push from the WCE. This had yet to include the mega development in Sarawak - SCORE, which will be building a lot of roads and highway, as well as the KVMRT line 2 and line 3 project that will see a lot of demand in steel as well.
Prestar position will be very bright in the coming days, fueled by major infrastructure project. Currently at the price of RM 0.64, Prestar is trading at a discount of 43% on it's NTA. Prestar will be seeing a strong booming growth in the coming 2 to 3 years period. At it's current price, Prestar will be a good target for both trader and investor to secure their position.
Prestar will be looking to break RM 0.65 and challenge RM 0.70 in the coming days. A short term outlook will see Prestar reaching RM 0.70, while a longer tenure will be looking at RM 0.85 to RM 0.90, with a projection of 10 cents in EPS trading at PER x9.
Do you want to choose to see or feel it yourself? You decide.
Bone's short term TP: RM 0.70
Cheers and have a nice day.
