PETALING JAYA: MIDF Research believes there is no immediate re-rating catalysts for Favelle Favco Bhd
but advised investors to remain invested in the company for its fair dividend payout.
“In light of the steep rise in share price, we believe that any further potential upside could be limited as there are no immediate re-rating catalysts for the stock.
“As such, we are downgrading Favelle Favco to ‘neutral’ from Buy previously with an unchanged target price of RM2.87 per share,” MIDF said.
The research house explained that its target on Favelle Favco was premised on EPS16 of 35.9sen pegged to price-to-earnings ratio (PER) 2016 of 8 times, which reflects its average monthly rolling PER for the past three years.
“We are advising shareholders to remain invested in Favco for its fair dividend payout of around 30% yielding approximately 3.8% per share,” it added.
The crane manufacturer has announced its first set of crane orders which was secured from December 2015 until now.
The six orders totalling RM64mil, consist of both offshore cranes and tower cranes. The company’s current orderbook is estimated at approximately RM750mil, implying a burn-rate of around three financial quarters.
MIDF explained that since November 2015, Favelle Favco’s share price had risen a meteoric 29.5% within a span of just two months. The stock price has also since breached our target price of RM2.87.
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