This article first appeared in The Edge Financial Daily, on November 4, 2015.

Prestariang Bhd
(Nov 3, RM2.59)
Maintain add with an unchanged target price of RM2.82: Prestariang’s share price has risen 24% over the past three weeks, outperforming both the FBM KLCI and the FBM Small Cap Index. 

Over the past year, its share price has been volatile.    

During the second quarter ended June 30, 2015 results briefing in end-August, the company said it was working on two major projects: a new strategic project and the accelerated Programme for International Student Assessment teacher-training contract. 

The management did not provide much details of the major strategic project other than that the public-private partnership is expected to be with US firm Unisys. 

The company expects to finalise this strategic project by Dec 31.

Prestariang’s University Malaysia of Computer Science & Engineering (UniMy) is expected to still be in the red in 2015. There are currently some delays in finalising the sale of its 30% stake in UniMy to Majlis Amanah Rakyat (Mara). This is due to the country’s cabinet reshuffle in end-July. 

Datuk Seri Mahdzir Khalid is the new education minister and he needs some time to familiarise himself with his new portfolio. As such, we do not believe UniMy will see any new students from Mara this year until the sale of the 30% equity stake to Mara is completed.

Prestariang’s share price tested the major support trend line two months ago, and has rebounded strongly from the trend line. Weekly technical indicators have turned positive. The weekly MACD has confirmed its bullish “golden cross”, while the RSI has broken past its resistance trend line, which is usually medium-term positive.  

Potential rerating catalysts include finalising both major projects and selling the UniMy stake to Mara. — CIMB IB Research, Nov 2