Bullish view on Prestariang’s Immigration IT project

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CIMB Research believes there is a need to revamp the country’s IT infrastructure through the National Immigration Control System (Skin – acronym for System Kawalan Imigresen Nasional), which Prestariang is currently working on.

Skin involves a total revamp of the Immigration Department’s IT infrastructure and is likely to be a concession house said.

“The Immigration Department IT system is close to 20 years old and we believe that there is a need to revamp the country’s IT infrastructure through Skin. An upgrade is not enough,” it said.

CIMB Research said the Skin project was supposed to be finalised in end-March but negotiations were taking a little longer than expected.

An issue was cutting the costs down for the Skin project, while maintaining the project required internal rate of return for Skin.

Prestariang has also indicated that most of Skin’s financial and technical issues have been dealt with and it is confident Skin will be project, the research approved by the Government in the next one to two months.

“The company shared with us that there are no third parties involved in Skin.

“There were other parties lobbying the Government and proposing similar projects to Skin but only Skin has the proper approvals from the Cabinet and other government bodies,” it said.

Other than Skin, Prestariang is also working on another public private partnership (PPP) project – to provide IT infrastructure and technical support for two polytechnics, offering marine engineering and digital creative design. Total capex is more than RM200mil for these two polytechnics and the conces- sion is over 15 years.

CIMB Research sees the recent share price weakness as a good opportunity to accumulate the stock.

MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BHD Target price:

AMINVESTMENT Research has cut Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) financial year 2017-2018 earnings by 30%-50% as its order book assumptions have been reduced by 20%-40%.

“Likewise, our earlier financial year 2016 net profit of RM107mil has been reversed to a RM11mil loss,” it said.

It said MMHE’s first half-year loss of RM10mil, from RM54mil net profit the same period last year was far below expectations compared with the street’s financial year 2016 net profit of RM83mil.

However MMHE’s second quarter revenue rose by 16% quarter-on-quarter to RM297mil as the group’s large projects – Malikai tension leg platform, Bergading structures and Kanowit hook up and commissioning – have reached the completion cycle.

It said MMHE had submitted RM1.8bil tenders, of which 90% were for local projects.