Protasco’s FY18, FY19 earnings to continue growth projection

KUCHING: Protasco Bhd’s ( Protasco) financial year 20182019 (FY18-19) earnings has been projected by analysts to growth by 24 per cent and eight per cent, respectively.

AmInvestment Bank Bhd (AmInvestment Bank) explained that this is underpinned by strong outstanding road maintenance concession order book of RM4.2 billion, strong earnings visibility over the long term from the road maintenance concession which will last till FY26 and potentially new affordable housing projects.

According to AmInvestment Bank, Protasco is the largest of the three federal road maintenance concessionaires in Peninsular Malaysia.

“Via 51 per cent- owned Roadcare ( M) Sdn Bhd ( Roadcare), it controls the central and eastern regions covering Selangor, Pahang, Terengganu and Kelantan, while its peers, private companies Belati Wangsa ( M) Sdn Bhd and Selia Senggara Sdn Bhd are in charge of the northern region (Perlis, Kedah, Penang and Perak) and the southern region ( Negeri Sembilan, Melaka and Johor) respectively,” the research firm said.

Based on the research firm’s estimates, Roadcare has a 49 per cent market share in terms of total annual billings of Peninsular Malaysia’s federal road maintenance concessionaires.

In its investment case for Protasco, AmInvestment Bank noted that the group has sturdy recurring incomes from road maintenance concessions, which encompass routine, periodic and emergency maintenance works.

“Currently, Protasco’s road concession outstanding order book for its six road maintenance concessions is valued at RM4.2 billion, covering almost 10,000 kilometres ( km) of federal, state and rural roads across the country,” the research firm said.

AmInvestment Bank also noted that Protasco is well positioned to benefit from the next upcycle in the property market via more aggressive launches from the group’s mixed development project, De Centrum, which is strategically located to south of Kuala Lumpur.

Additionally, Protasco has attractive dividend payouts, with the group offering a good dividend yield of approximately six to seven per cent annually.

All in, AmInvestment Bank initiated coverage of Protasco with a ‘ buy’ call and a sum of parts (SOP)-based fair value of RM1.33 per share.