PROTASCO (5070) Now Bombed Out By Bad News Until Value Has Emerged (Pro Tasks Company) Calvin Tan Research

June 28, 2018 By Calvin Tan Smart Investment

As the Name Protasco implies:

 

Pro – A Penchant For Something

Tas – Tasks (Yes Lots of Tasks. From Road Works to Affordable Housing. From Clean Energy to Education)

Co as in Company

 

So Protasco is a Company Tasked with Many Jobs, Dirty Down to Earth Hand soiling jobs. All these Tasks have made Protasco what it is today.

 

1) PROTASCO Has Been In Business for More than 20 Years

A Long History of Road Paving & Maintainence for PLUS, GAMUDA, JKR

 

2) IT HAS CAPTURED BUSINESS IN EVERY STATE OF WEST MALAYSIA & THE STATE OF SARAWAK (in spite of CMSB also doing Road Maintainence Work in Sarawak)

 

3) RECENT BAD NEWS ABOUT PROTASCO MANAGEMENT HAS CAUSED A SELL DOWN ON PROTASCO SHARES UNTIL REAL VALUE HAS FINALLY EMERGED

 

At today closing price of 48.5 sen with NTA of almost 88 sen Protasco is now selling at a nice 45% discount to NTA which is 1.5 times the margin of safety Ben Graham requires

And a check with Protasco’s Assets revealed Real Estates bought as long ago as year 2002 with Prices still at Old Book Value

Now let us just peek into One Asset of Protasco (refer AR 2017) Under Properties Owned by Protasco

 

3. Lot No. P.T. 172, Section 90 Town and District of Kuala Lumpur State of Wilayah Persekutuan. Intermediate four-storey shophouse.  1,760 sq ft. or x4 =  7,040 total sq ft built up

Year bought/value : Rm616,000

 

AMAZING. PROTASCO BOUGHT THIS 4 STOREY SHOPHOUSE IN KL 16 YEARS AGO FOR ONLY RM616,000

In KL just a 2 storey dwelling house is worth more than Rm700,000 (How can a 4 storey SHOPHOUSE Be worth only Rm616K?)

IF ALL THE ASSETS OF PROTASCO ARE REVALUED AND BROUGHT TO CURRENT MARKET VALUE THEY SHOULD BE

2X, 3X or 4X more?

 

4) WITH DECADES OF ASSETS BUILT UP TODAY PROTASCO HACE ABOUT RM200 MILLIONS WORTH OF PROPERTY, PLANTS & EQUIPMENT (PPE)

 

No other single company has Such a Large Assortment of Road Pavers, Rollers & others like Protasco

And Protasco bought them years ago when USD to Rm was about Rm2.40

At USD1 to Rm4.05 all these Equipments are far too expensive to own.

So there is no replacement for Protasco Type of Business as Cost of Barrier to Entry is High & prohibitive

Not only that PLUS, OPUS, PROPEL, GAMUDA, LITRAK & EVEN JKR NEED TO OUT SOURCE JOBS TO PROTASCO

– SO PROTASCO STILL REIGN AS KING OF ROAD MAINTAINENCE & REPARS FOR A VERY LONG TIME TO COME

AND THE JOB AWARDED ARE ALSO FOR MANY YEARS – FROM 7 YEARS TO OVER 10 YEARS ROAD MAINTAINENCE JOBS IN WEST MALAYSIA & SARAWAK

So Protaso like Water Utility (PBA) Stock & Power Stock like YTL Power are Recession Proof

More so as Govt has Scrapped HSR (or postponed HSR & MRT 3 as well

 

With Only Highways for Transport Protasco will be kept very busy in its MAIN TASK OF KEEPING OUR HIGHWAY SAFE

 

5) OTHER LATEST DEVELOPMENTS WILL SPUR MORE NEED FOR ROAD REPAIR

A) With Removal of GST There is a Roaring Sales of Cars Made Cheap!!

See the HUGE BOOKINGS

Vehicle sales to pick up in May on zero GST boost

 

And with PH GOVT ABOLISHING TOLL ROAD CHARGES – EXPECT EVEN MORE PEOPLE TO TRAVEL ON MALAYSIAN HIGHWAYS

 

ANOTHER BOOST IS FROM eCOMMERCE- EVERY NOOK & CORNER OF MALAYSIAN SME WILL BE REACHED BY LOGISTICS OF LORRIES, VANS, MOTOR BIKES & PICKUP TRUCKS

 

ALL THESE ADDED TRAFFIC WILL TRASH OUR ROADS & HIGHWAYS MORE AND MORE

 

SO PROTASCO REALLY GOT LOTS OF TASKS ON HAND.

OTHER TASKS ARE EDUCATION, AFFORDABLE HOUSING, GREEN TECH ENERGY

BUT ABOVE ALL CALVIN LIKES PROTASCO FOR ITS GREAT DIVIDENDS

EVERY YEAR WITHOUT FAIL PROTASCO HAS BEEN GIVING OUT GOOD DIVIDENDS

SEE

 

 

With 5.5% dividend for year 2018 at Current Price of 48.5 sen

 

PROTASCO’S DIVIDEND IS A WHOPPING 11.3%

 

DR NEOH SOON KEAN SAID DURING CRISIS THE SUPPORT OF A DIVIDEND PAYING SHARE IS ABOUT 12% BENCHMARK

SO PROTASCO WON’T FALL MUCH FROM HERE ONWARD

 

BEST REGARDS

 

Calvin Tan Research

 

Please buy/sell after doing your own due diligence.

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