Eonmetall said its wholly owned subsidiary Eonmetall Carotene Oil Sdn Bhd (ECOSB) had entered into a build, operate, own and transfer (BOOT) arrangement with Felda
KUALA LUMPUR: Eonmetall Group Bhd
’s share price rebounded to 56.5 sen early Friday, the highest since mid-August as investors were positive about its contract with Felda Palm Industries Sdn Bhd to build palm fibre oil extraction (PFOE) plants.
At 9.38am, its share price was up 5.5 sen to 55.5 sen with 2.96 million units traded.
The FBM KLCI fell 6.49 points or 0.36% to 1,783.62. Turnover was 395.92 million shares valued at RM228.68mil. There were 118 gainers, 360 losers and 227 counters unchanged.
AmInvestment Bank Research said it was positive about the build-operate-own-transfer arrangement with Felda Palm, a 72% subsidiary of FGV.
Eonmetall will construct, commission, operate and maintain a PFOE plant each alongside six Felda Palm’s existing palm oil mills on a profit-sharing basis over 10 years.
“Upon successful implementation of these six PFOE plants, the same arrangement may be extended to another four palm oil mills owned by Felda Palm,” it said.
AmInvestment Research was positive on the latest development. Eonmetall has effectively delivered what it guided, i.e. concluding a major deal with a major planter involving the investment in several PFOE plants on a concession basis, it pointed out.
“Eonmetall will get two bites at the cherry: (1) profits from fabrication of the plants; and (2) recurring profits from the sale of the residual palm oil extracted over 10 years.
“We maintain our buy call, forecasts and fair value of 92 sen based on eight times FY18F EPS of 11.5 sen. This is at a discount to the manufacturing sector’s average one-year forward PE of 10-11 times to reflect Eonmetall’s relatively small market capitalisation,” it said.
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