Protasco - De Centrum City

It is a defensive stock given that the company profits highly from its road maintenance and construction division.

Protasco is maintaining about 14000km of federal and state roads under long term maintenance contracts and concession. The outstanding value for these road maintenance and construction works stands at rm1.7 billion which would provide earnings visibility to group for the coming three years from 2013.

Protasco’s crisis is the civil unrest in Libya , which led to the company halting operations in Malaysia in 2011. Protasco has written off rm40 million in provisions over the past two years from 2013 which the company is seeking to claim form the Libyan government.

In spite of the imminent risks, it is not deterred from its work there and is in fact facing considering extending its stay beyond the completion of the suspended works.

It has also announced its intention of getting into the oil and gas sector, and has proposed to acquire a 76% stake in PT Anglo Slavic Indonesia for rm171 million which is waiting due diligence and is expected to be completed in Oct 2013. The acquisition of an upstream oil and gas company will also open up opportunities to provide the downstream services to other concession holders. Protasco plans to get involved in the constructing part of exploration and supply of accessories and equipment.

Also, Protasco owns approximately 100 acres of freehold land in Kajang for a mixed development known as De Centrum City. The land’s GDV alone is worth about 15 times more than the company’s market cap of rm420 million as at 31 July 2013.

This RM10 billion De Centrum integrated development in Bangi is essentially the redevelopment of its 100-acre University Kuala Lumpur (IUKL) land acquired at a very low price more than a decade ago.
Property development is still a small part of its business but the group intends to make the segment one of its core businesses. The construction business will remain the largest contributor, contributing rm99.5 million or 96% of its operating profit.

It owns a 40ha plot in Kajang of which it plans a mixed development worth a GDV of rm6.6 billion.

Protasco is in a net cash position of about rm105 million. Cash and its equivalent stood at rm147.13 million as at end FY2012 while total borrowings amounted to rm42.3 million.

Its healthy balance supports its aggressive business expansion. Debt to equity ratio stood at 0.697 times as at end FY2012.

It has an unofficial dividend payout policy of 60% of net income every year.

Tey Por Yee became the second largest shareholder with a 15.13% stake in Adison. Tey is also the CEO, MD and executive director of Nextnation, a director of Protasco Bhd and former executive provider of Petrol One Res Bhd.