Friday, October 29, 2010

OSK Research: FV for Plenitude at RM5.56

KUALA LUMPUR:'' OSK Rsearch said Plenitude's proposed one-for-one bonus issue will go ex on Nov 12, 2010. The entitlement date for the bonus is Nov 16.

The bonus issue involves an issuance of up to 135 million shares. However, OSK Research said on Friday, Oct 29 the bonus issue exercise would not have an impact on its earnings forecast.

Ex-bonus, the earnings per share and net tangible asset/share will be reduced by 50% (FY11: from 72.4 sen and RM5.94 to 36.2 sen and RM2.97 respectively).

'Plenitude is one of our top picks for the Malaysian property sector as we believe that the company will ride high on the coming property upcycle between now and 2012/13, which will be primarily led by mid-to-high end landed PROPERTIES [],' it said.

OSK Research also stated that as this is also the first time that Plenitude is actually being proactive in addressing the issue of the stock's liquidity since its listing in 2003, there is a possibility of the stock trading at a premium even to its historical valuation.

'Our recent target price of RM4.84 (cum) was derived from 0.8 times CY11 price/net tangible asset. If we ascribe a liquidity premium of 15% to the stock's historical valuation, this would translate into our new fair value of RM5.56 for Plenitude (or RM2.78 ex-bonus), equivalent to 0.9 times CY11 P/NTA,' it said.

OSK Research said the stock was well-supported by anticipated strong earnings growth, a healthy balance sheet with a net cash of RM2.02/share (40% of current share price), and the fact that it is trading below its net asset value.

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