SBCCORP (5207) : SBC Corp - 1:2 bonus issue nailed down
Target RM2.64 (Stock Rating: ADD)
The completion of SBC Corp’s 1-for-2 bonus issue should help boost the stock’s trading liquidity and make it more attractive to retail investors. We maintain our EPS forecasts and also our target price, which is based on 40% discount to RNAV, in line with other small-cap property stocks. SBC remains an Add, potentially catalysed by the maiden launch of the Jesselton Quay (JQ) project, hopefully in 4QCY14, and its huge share price discount of 68% to its RNAV.
What Happened
SBC Corp went ex of its 1-for-2 bonus last Friday (31 Oct). This corporate exercise has boosted its issued share base from 156.6m shares to 234.9m shares. We have adjusted our ex-bonus target price to RM2.64, 40% discount to its RNAV/share.
What We Think
While the 1-for-2 bonus does not change the company’s fundamentals, a bigger share base should improve the stock’s trading liquidity and the lower ex-bonus share price will make it a little more attractive to retail investors. Meanwhile, for the maiden launch of the Jesselton Quay (JQ) project in Kota Kinabalu, we were expecting SBC to launch JQ in the middle of this year but there are delays in getting the final state approvals. The company is targeting to launch RM300m worth of properties in the JQ project once it gets approval, likely in 4QCY14. In Sep, the company already had a positive start for JQ when the company signed a heads of agreement with Singapore hotel operator HPL Hotels & Resorts Pte Ltd to build the “Kota Kinabalu Hard Rock Hotel” in JQ, expected to cost RM180m-200m. Our forecasts do not reflect potential earnings from this development.
What You Should Do
Investors should remain invested in this stock. We believe its share price has been trading sideways mainly due to the delays for JQ. Launch of the project should help narrow the stock’s huge discount to its RM4.40 RNAV/share.
Source: CIMB Daybreak - 03 November 2014
Target RM2.64 (Stock Rating: ADD)
The completion of SBC Corp’s 1-for-2 bonus issue should help boost the stock’s trading liquidity and make it more attractive to retail investors. We maintain our EPS forecasts and also our target price, which is based on 40% discount to RNAV, in line with other small-cap property stocks. SBC remains an Add, potentially catalysed by the maiden launch of the Jesselton Quay (JQ) project, hopefully in 4QCY14, and its huge share price discount of 68% to its RNAV.
What Happened
SBC Corp went ex of its 1-for-2 bonus last Friday (31 Oct). This corporate exercise has boosted its issued share base from 156.6m shares to 234.9m shares. We have adjusted our ex-bonus target price to RM2.64, 40% discount to its RNAV/share.
What We Think
While the 1-for-2 bonus does not change the company’s fundamentals, a bigger share base should improve the stock’s trading liquidity and the lower ex-bonus share price will make it a little more attractive to retail investors. Meanwhile, for the maiden launch of the Jesselton Quay (JQ) project in Kota Kinabalu, we were expecting SBC to launch JQ in the middle of this year but there are delays in getting the final state approvals. The company is targeting to launch RM300m worth of properties in the JQ project once it gets approval, likely in 4QCY14. In Sep, the company already had a positive start for JQ when the company signed a heads of agreement with Singapore hotel operator HPL Hotels & Resorts Pte Ltd to build the “Kota Kinabalu Hard Rock Hotel” in JQ, expected to cost RM180m-200m. Our forecasts do not reflect potential earnings from this development.
What You Should Do
Investors should remain invested in this stock. We believe its share price has been trading sideways mainly due to the delays for JQ. Launch of the project should help narrow the stock’s huge discount to its RM4.40 RNAV/share.
Source: CIMB Daybreak - 03 November 2014
