Wednesday, December 14, 2011

RHB Research maintains market perform on Faber, FV RM1.53

KUALA LUMPUR (Dec 14): RHB Research Institute is maintaining its market perform call on FABER GROUP BHD [] and leaving its sum-of-parts fair value estimate of RM1.53 unchanged pending the outcome of a lawsuit filed by a UAE contractor

It said on Wednesday that Faber reported that its UAE subsidiary, Faber LLC, and Project Penyelenggaraan Lebuhraya Bhd (Propel) received a summons and statement of claim from the UAE contractor Al Femah Contracting and Transporting Establishment (Al Femah) amounting to about RM13.1 million.

RHB Research said following an earlier lawsuit by Baynona Group, Faber'' now faces new claims made by Al Femah in relation to completed contract works for the infrastructure facilities at Madinat Zayed, UAE.

The contract works were first awarded to Faber LLC by the Department of Municipal Affairs, Western Region Municipality was subsequently contracted out to Propel which in turn, subcontracted out works to Al Femah.

'We understand from management that there was no direct award of subcontracting works to Al Femah. Propel had also informed Faber that it is currently disputing an additional claim of approximately RM7.3 million from Al Femah, on top of the approximately RM5.7 million outstanding amount owed to Al Femah,' ir said.

The research house said the lawsuit against Faber is currently at a preliminary stage as Al Femah is seeking Al Dhafra Court's approval to accept the case and serve summons to Faber and Propel in relation to the amounts claimed.

'Risks to our view are a failure to secure an extension to the concession agreement with the government; and delays in property launches and approvals, which could affect revenues from the property segment,' it said.

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