Scientex was among the top gainers as investors were positive about its purchase of Mondi Ipoh Sdn Bhd (MISB) for RM58mil cash to expand its consumer packaging division.
KUALA LUMPUR: Kenanga Research maintained its Outperform call but raised its target price on Scientex Bhd
to RM7.40 from RM6.40 on increased property sector valuations in tandem with peers.
It said the target price was based on its sum-of-parts FY19 valuations with a higher price earnings (PER) ratio of 10 times for the property segment, which is at a 15% discount to the PER of small-mid-cap property players and Johor exposed peers under its coverage PER.
It said this was due to the group’s exposure in the challenging Johor market after taking into consideration recent recovery in overall share prices.
The research house added that the higher target price was also based on an unchanged 14 times applied PER for the manufacturing segment.
“We are comfortable with our Uunderperform call as foreseeable upsides have been accounted for,” it said.
Scientex announced that it had entered into a SPA with Real Golden Development Sdn Bhd (RGSB) to acquire two pieces of freehold agriculture land measuring 208.9ac for RM68.2mil, implying a price of RM7.50 psf.
The land is slated for a mixed development project, but further details such as total GDV, development cost, commencement and completion dates are too preliminary to ascertain.
The acquisition will be funded by internally-generated funds or bank borrowings, and is expected to be completed in 1H of 2019.
“We were fairly surprised by the management's move to further increase landbank in Malacca, but we are neutral on the exercise as we do not expect a significant impact to earnings in the near term.
“We are unable to derive a direct comparable for the said land due to minimal historical references,” it added.
However, it noted that historical transactions for mixed land titles in Malacca ranges from RM23-49psf.
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