On 13th March, We have featured Pintaras Jaya as a undervalued and overlooked company. It was trading at 20% discount to our Fair value of RM3.90. Since then it has rallied from RM3.05 to RM4.00 translating a 31% increase in price. The rally was very much triggered by the news of receiving a new contract worth RM71Million on the 7/4/2014.
The million dollar question now is, can this rally continue?
Looking at the order received announcement records, YTD 2014, it has received RM169Million worth of orders. This is 78% of last years RM256million order book which itself a record high. However, interestingly 2013 revenue is slightly lower then in 2012 mainly due to delays in project delivery. Which means a better Earnings can be anticipated for 2014 with the over flowing of earnings from 2013. If 2014 records higher order book, certainly market will anticipate stronger earnings.
As this discussion goes on, one thing is obvious: From a actual undervalue position based on the current earnings, we are moving on to forecasting a undervalue position based on anticipated earnings. Hence, risk in investing in Pintaras Jaya has risen accordingly. Safety of margin has reduced drastically if not no longer available. Also looking from the price movement, a short term correction is bound to occur.
In conclusion, at this price levels, it is no longer cheap yet not overly expensive either. the underlying fundamental of business has not change at all. Buying now, risk level has gone up and one must take a short term correction into account. For the longer term, as long as the projects theme is still in play, This counter will be in a good position.
Note: I am a share Owner of Pintaras Jaya
Happy Investing !
(For more company articles please click: Company Analysis)
No comments:
Post a Comment