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Sunday, 11 October 2015

Pestech: My Darling Stock

1. Management Team / Major Shareholders:

After Humblepie188 sharing on 17 July @ Price 5.15, we did notice the CEO/ED Mr. Lim Pay Chuan made another purchase on 2nd Sept at the price of 5.31. This further enhances our believe that Mr. Lim has confident with his listed vehicle to continouously generating good profits. 

2. Financial Health Analysis 
Income Statement
i.Profit Margin = 14% / PASS (if < 5% fail)
ii.Profit for the past 5 years = Profit since listing in 2012 and growing / PASS 
iii.Interest Cover = 6.27x / PASS (if <3x fail)

Balance Sheet
iv.Current Ratio = 1.7x/ PASS  (if < 1x fail)                    
v.Debts to Equity Ratio = 1.3x / PASS (if > 3x fail)

Cash Flow
vi.Positive at least 1 year                     = YES / PASS

3. Pricing Analysis
i.  P/E Ratio: 
Sept 14 + Dec 14 + Mac 15 + June 15
5.06 + 5.18 + 5.37 + 16.78 = EPS 32.1
Price 5.95 / 32.10 = PE 18.5x Comparable to PE for FD (Not Cheap)
ii.  P/BV 3.65 (Not Cheap)
iii. Dividend Yield 1% - Negligible - Comstruction companies rarely pay dividends  
4. Economic / Industry - Theme play for now?
The past few months we had seen the volatility of RM/USD. From 3.50 to 4.20 It definately gives a good impact on Pestech's forex gain. The suprise EPS for Q4 2015 gives us the confident that the next quarter will be better due to the impact from forex gain for the period of June to Sept. We believe it has not been factored in. Pestech main revenues mainly comes from Cambodia and it is quoted in USD. The challenging environment is Malaysia will be a minor issue to Pestech's outlook. For construction companies like Pestech, she is defensive for current market scenario.
As long as Paul Lim still accumulating from the market, I'm confident with him. PE 18.5x is not cheap. For those investors who are willing to look at this counter, do prepare to hold mid to long term with less dividends. Congratulations again to Pestech who has joined the billionaire club.

Disclaimer and Declaration

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.


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