KUALA LUMPUR: RHB Research has initiated coverage on DRB-HICOM BHD [] with an outperform recommendation at RM2.30 with a fair value of RM3.15 and said the company had significant dealflow potential that could continue to yield new business contracts going forward.
It said on Friday, April 15 that DRB-Hicom has largely flown under investors' radar since its acquisition by Etika Strategi and induction into the Albukhary Group of companies in 2005.
The ensuing years saw a makeover of the Group's businesses that included the acquisition of Bank Muamalat and Rangkai Positif and the disposal of non-core assets.
'DRB-Hicom is today an expansive industrial conglomerate with a dazzling array of assets grouped under three operating divisions that offer strong growth potential as well as a high degree of earnings resilience.
'We believe DRB-Hicom has significant dealflow potential that could continue to yield new business contracts going forward. ''DRB-Hicom has solid financials with significant balance sheet capacity to fund new businesses,' it said.
RHB Research said its sum-of-parts derived valuation of its various businesses amounted to RM4.20 per share.
'After ascribing a 25% holding company discount, we arrive at our fair value for the stock of RM3.15 per share.
'PER valuations of 7.7 times and 6.6 times FY12 and FY13 respectively are undemanding, considering the implied 3-year FY10-FY13 recurring net profit CAGR of 37.1%,' it said.
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It said on Friday, April 15 that DRB-Hicom has largely flown under investors' radar since its acquisition by Etika Strategi and induction into the Albukhary Group of companies in 2005.
The ensuing years saw a makeover of the Group's businesses that included the acquisition of Bank Muamalat and Rangkai Positif and the disposal of non-core assets.
'DRB-Hicom is today an expansive industrial conglomerate with a dazzling array of assets grouped under three operating divisions that offer strong growth potential as well as a high degree of earnings resilience.
'We believe DRB-Hicom has significant dealflow potential that could continue to yield new business contracts going forward. ''DRB-Hicom has solid financials with significant balance sheet capacity to fund new businesses,' it said.
RHB Research said its sum-of-parts derived valuation of its various businesses amounted to RM4.20 per share.
'After ascribing a 25% holding company discount, we arrive at our fair value for the stock of RM3.15 per share.
'PER valuations of 7.7 times and 6.6 times FY12 and FY13 respectively are undemanding, considering the implied 3-year FY10-FY13 recurring net profit CAGR of 37.1%,' it said.
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