KUALA LUMPUR, Jan 12 (Bernama) -- MIDF Research has reiterated its "buy" recommendation on Faber Group Bhd with the target price unchanged at RM3.60 despite the renewal risk of Faber's Hospital Support Services (HSS) concession in Sabah and Sarawak.
It said the unchanged target price was based on Sum-of-Parts (SOP) valuation with an implied price earning ratio of 12.2 times and estimated financial year 2011 earnings-per-share growth of 12.5 per cent.
"Should Faber lose the concession, we are optimistic they will become a key sub-contractor in East Malaysia given their strong expertise, human capital and facilities for HSS.
"Even if Faber loses its East Malaysia concession contract (and maintain its Peninsular Malaysia concession), MIDF's target price based on SOP will still be at RM2.84, a premium of 6.4 per cent against the last closing price of RM2.67," it said in a research note.
MIDF also foresees potential upside to Faber's property division with the launch of the mid-to-high end condominium project in September on a 2.55 acres in Kuala Lumpur.
The research firm said it was optimistic on the take-up rate of the project, given its strategic location, easy access to highways and also experienced developer riding on the Taman Desa project.
"Current unbilled sales stand at RM756 million that will flow into their property earnings visibility for the next three to four years," it added.-- BERNAMA
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