Tie-up with Thales synergistic for Prestariang — Analyst
KUCHING: Prestariang Bhd’s ( Prestariang) tie-up withs Thales Communications & Security SAS ( Thales) and Thales Malaysia to facilitate the implementation of Sistem Kawalan Imigresen Nasional ( SKIN) has been viewed as synergistic for its ICT training and education businesses.
The re s ea rch arm of AmInvestment Bank Bhd (AmInvestment Bank) said, “The potential tie-up could translate into transfer of technology to Prestariang’s Malaysia- based operations which would be synergistic to the company’s ICT t ra i n i ng and educat ion businesses.”
From the collaboration, the research team said Prestariang could nurture local talents in the border security field and provide related training services in the future.
According to Stockholm International Peace Research Institute (SIPRI), Thales is the 11th largest arms-producing and military services company in the world (excluding China) in terms of arms sales.
Thales has advanced technical know-how and vast experience in designing and building defence systems and providing security services.
“To recap, on November 28, 2016, theCabinetapprovedPrestariang’s proposal to implement SKIN with the objective of beefing up national border security.
“SKIN is an integrated technology plat form aimed at enhanci ng the core applications and infrastructure of the national immigration system.
“The public-private partnership project has a 15-year concession period comprising three years to build and deploy, and 12 years of operational maintenance phase under a Build, Operate, Maintain and Transfer ( BOMT) arrangement,” AmInvestment Bank said.
It added, the twelve annual payments averaging RM295 million each year would be made to Prestariang after three years, when the system is fully functional, which means the project has a value of RM3.5 billion.
This could underpin the group’s forward earnings growth momentum, said the research team.
“We note that Prestariang could recognise revenue from SKIN in accordance with the IC Interpretation 12 vis-à-vis Service Concession Arrangements.
“Under this arrangement, Prestariang is projected to record an annual revenue of RM648 million and a pre-tax profit of RM33 million in the first three years of the project.
“For FY17F, we are assuming a hal f- year cont r ibut ion from SKIN to account for possible delays in execution,” it said.
From a low base, it estimated that Prestariang’s earnings could register a FY16 to FY19F compound annual growth rate (CAGR) of 100 per cent, premised on a recent contract to implement SKIN, pickup in ICT training orders from Refinery And Petrochemicals Integrated Development ( RAPID) project in Pengerang, and uptick in student registration at University Malaysia of Computing Science & Engineering ( UniMy).
All- in, AmInvestment Bank retained its ‘ buy’ cal l on Prestariang.