The new border control system -- Sistem Kawalan Imigresen Nasional -- will replace the current Malaysian Immigration System (myIMMs).
PETALING JAYA: Prestariang Bhd’s (Prestariang) success in securing the concession for the Sistem Kawalan & Imigresen Nasional project (SKIN) last week, will see the company reaping a long-term revenue of RM3.5bil over the 15-year concession period.
CIMB Research said on Monday that the discounted cash flow (DCF) for SKIN is valued at RM390mil, assuming a capital expenditure of RM900mil, 13% project internal rate of return and 6% weighted average cost of capital.
“As we believe the company is not planning a rights issue, equity funding would likely be from investors buying a direct stake in SKIN.
“Assuming an equity-debt structure of 20:80, Prestariang could be looking to raise around RM180mil, if not more for SKIN’s equity portion,” said CIMB Research in its report.
SKIN which is based on a build, operate, transfer system (BOT), involves the overhaul of the existing IT infrastructure network for the Immigration Department, including improving systems to beef up border control.
The SKIN infrastructure platform can also be used by the country’s other ministries, which need only to link their networks to SKIN. This means a much lower capital expenditure for the government.
“Based on our assumptions, SKIN should record an average pretax profit of around RM100mil annually starting from the project’s fourth year and beyond.
“If Prestariang is able to complete its construction and installation works before the end of the third year, profits could flow in even earlier than the fourth year,” said the research house while adding that it raises its earnings per share forecasts for financial years 2017 and 2018 by 9-13%, mainly to reflect potential construction profits from SKIN.
CIMB Research has maintained its “add” call on Prestariang’s shares and raised the target price to RM3.23.
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