Yong Tai stock remains deeply undervalued, says PublicInvest

KUALA LUMPUR: PublicInvest Research believes the market should not be too perturbed by the near-term earnings-dilutive effects of Yong Tai Bhd's early conversion of preference shares.

Commenting on the resulting share price weakness, the research house said the focus should instead be on the company's earnings growth trajectory and long-term value creation.

"We see the recent share price weakness as an opportune time to further accumulate a stock currently deeply undervalued," it said.

PublicInvest noted that Yong Tai's management has denied rumours of major shareholders planning to cash out and/or illness. 

In other developments, the Encore Melaka Theatre sold a total of 32.413 tickets on Aug 5, one month after its official opening.

"While some way short of a pro-rated monthly target of 83,333 tickets, the lower-than-expected numbers are within expectations as the  “high-season” for tourist arrivals are only anticipated sometime late-September/early-October. 

"Recall that the Group had previously announced annual offtake agreements with 6 different agencies, totaling 1m tickets. Management also stressed they continue to make efforts in securing fresh sales, not relying wholly on the offtake agreements," said Public Invest.

Meanwhile, the Terra Square development has been temporarily halted to due funding-related issues caused by China's capital controls. 

Yong Tai is in talks with various parties for the possible acquisition of the entire project from the current owners should the deal fall through. It also indicated the possibility of drawing from its sukuk issue to fund the construction of the project. 

PublicInvest reaffirmed its outperform call on Yong Tai with an unchanged target price of RM2.25.