RHB Investment Bank Bhd (RHB Research) has maintained its BUY call on Pintaras Jaya Bhd with a target price of RM1.85, reflecting a 21% upside from its current price of RM1.53. The research house believes that Pintaras Jaya's solid performance in its first quarter of the financial year of 2025 (1QFY25), along with positive job prospects, justifies the optimistic outlook. The company's core earnings of RM2.1 million for the quarter represented over a 100% year-on-year (YoY) increase, exceeding both RHB's and street estimates, with the results forming 23% and 42% of full-year projections respectively.

The construction arm of Pintaras Jaya saw a significant jump in earnings before interest and tax (EBIT), which increased by more than 100% YoY to RM8.2 million. This growth was supported by a 61% year-on-year revenue increase driven by stronger construction activity in Singapore, where approximately 90% of the company's order book is located. Analysts highlighted that cost pressures from previously loss-making projects, particularly in Malaysia, have lessened, as most of these projects have been completed. The manufacturing segment also posted a solid EBIT of RM2.3 million for 1QFY25, showing a 60% year-on-year growth, with margins improving due to better cost efficiencies.

Pintaras Jaya's order book as of October stood at RM325 million, which represents a cover ratio of 1.3 times, with year-to-date new job wins worth RM242 million. The company is expected to continue benefiting from the robust pipeline of public sector projects in Singapore, with 9M24 public sector awards reaching SGD19.8 billion, up 59% year-on-year. RHB Research remains upbeat about the potential for Pintaras Jaya to secure more contracts, particularly with major infrastructure projects such as new Housing & Development Board (HDB) developments, the Cross Island MRT Line (Phase 3), and Changi Airport's Terminal 5, all slated for the upcoming years.

The analysts also noted the potential for Pintaras Jaya to capitalise on spillover benefits from the growing tech sector, as rising US-China tensions could drive more tech giants to expand into Singapore, where Pintaras Jaya has experience with semiconductor factory constructions. Despite this optimism, RHB Research has acknowledged key risks, including slower-than-expected job replenishments and potential project delays.

With no changes to earnings projections, RHB Research's target price of RM1.85 remains unchanged, pegged to a 0.9x FY25F price-to-book value (P/BV). This target is supported by the growth potential in Singapore's construction sector, which has seen consistent growth in GDP, expanding by more than 3.5% in each quarter of 2024.