Prestariang to invest up to RM1bil in Skin project
KUALA LUMPUR: Information and communications technology firm Prestariang Bhd will invest up to RM1bil to build and deploy its recently-secured Sistem Kawalan Imigresen Nasional (Skin) project.
The group has clinched the 15-year-long concession worth RM3.5bil via Prestariang Skin Sdn Bhd (Pskin), a unit of Prestariang Services Sdn Bhd, which in turn is a subsidiary of Prestariang. Skin is an integrated technology platform to modernise the core applications and infrastructure of the country’s immigration system.
According to Prestariang president and group chief executive officer Dr Abu Hasan Ismail, the group will need RM1bil financing in the first three years of the concession from 2018 to 2020.
“We will look at raising funds from the capital market and the debt market via different methods such as sukuk and direct term-loan to finance the deployment of Skin. However, we are discounting the possibility of engaging in a rights issue or private placement for this purpose.
“The government will start paying us from the fourth year, which is year 2021 onwards. The government only makes payments after the service is rendered, so the risks in the first three years will be fully borne by us.
“We see Skin as a good business for Prestariang, as it comes with assured payment and is a form of recurring income for us,” Abu Hasan told reporters at a media briefing on Skin.
Skin is projected to provide the information and communications technology firm an annual payment of about RM294.7mil from year four to year 15 during the maintenance and technical operation phase.
With the signing of Skin’s concession agreement, it marks a significant milestone for the group, as the first phase of its transformation programme is now successfully completed. The group has undertaken a transformation programme called “Transformation 5.0” to identify itself as a platform-based services company aligned to two core business streams, namely, technolo- gy and talent.
Despite the multi-million revenue contribution from the project guaranteed by the government, CIMB Research has indicated its neutral stance on the impact of the project on Prestariang.
“We are neutral about the development as Prestariang’s announcement has come with both positive and negative elements.
“The positives are potentially higher construction and concession earnings for Skin. In addition, the project’s internal rate of return could be higher if Skin obtains Multimedia Super Corridor status. However, the main negative is the revelation that Prestariang will only have an effective 70% stake in Skin,” said the research house, which has maintained its “add” call on the company.
To note, Prestariang has indicated that the remaining 30% stake in Skin will be held by the founders of the immigration and national border control system.
As of the close of trading yesterday, Prestariang was down 20 sen or 8.37% to RM2.19, with some 7.39 million shares being transacted. This was a marked reversal of the 15-sen increase in share price on Monday, prior to the announcement of the Skin project.
The counter was temporarily suspended on Tuesday.