Prestariang acquiring new offices for RM25.51 mln a good move, analysts say

KUCHING: Prestariang Bhd ( Prestariang) has announced its proposal of purchasing an 8- storey semi- detached corporate office and retail suite in Cyberjaya for RM25.51 million from Joyful Star Sdn Bhd ( Joyful Star).

In a recent filling with Bursa Malaysia, the Information and Communciation Technology ( ICT) player announced that as of last Friday, it had entered into eight separate Sales and Purchase Agreements ( SPA) with Joyful Star which would provide vacant possession of the property to Prestariang within 36 months.

The rationale of the acquisition has been cited to be for the housing of the group’s new transformational businesses as well as any other future business expansions of the group.

There search arm of Public Investment Bank Bhd ( PublicInvest Research) believed these transformational businesses are referring to the group’s EduCloud and Sistem Kwalan and Imigresen Nasional ( Skin) projects which are tipped to be major growth drivers for the group over the next decade.

As to how the group expects to fund this acquisition, its management has guided that RM2.8 million would be derived from internally generated funds while the remaining RM22.7 million would be sourced from Bank borrowings.

PublicInvest Research believed this would not be an issue in the near to medium term due to the group’s robust coffer.

“Upon completion of the proposed acquisition, the company will still be in a net cash position with excess cash of RM55 million, which will be retained for the rollout of its Skin project starting this year,” shared the research arm.

With the acquisition expected to have little to no financial impact on the group, the research arm has decided to maintain its ‘ Outperform’ call on the stock with and unchanged target price of RM2.87.