This comes off the back of a proposed acquisition of 51.5% equity stake and 37.6 million warrants in Chin Hin Property Group, which the research house also sees as complementary.
"We keep earnings estimates and RM1.52 target price unchanged pending full completion of both deals, though valuations could rise to RM2.10 with combined earnings of both entities (CHGP and SIB)," it said, while reiterating its "neutral" recommendation.
It added that it has not accounted for possible dilution from the proposed private placement.
The proposal to acquire a stake in Signature International was cited as an opportunity to enable the group to tap into the business-to-consumer segment, while also benefiting from the latter's RM429mil outstanding order book.
While the acquisition appears to be expensive based on prospective earnings, the deal will make a lot of financial sense should Signature International be able to capture past earnings achievements such as during the 2016/2017 periods, said PublicInvest.
As at Dec 31, 2020, the Chin Hin Group has cash holdings of RM49.9mil and a net gearing ratio of 0.81x, the latter mostly short-term and trade-related, which gives it comfortable room to debt-finance this acquisition, it added.