E&O - Blue-chip backing (CIMB)

Though there were no major surprises from E&O’s briefing on its Iskandar Malaysia property JV with Khazanah and Temasek, we take a positive view of this venture as it is a stamp of approval from these blue-chip institutions and another feather in E&O’s cap. But earnings contribution will be minimal until FY3/15 as the earliest launch date for the 210-acre wellness township is end-2012. We retain our earnings forecasts and our target price of RM1.96, which we continue to peg to a 30% discount to its FD RNAV/share of RM2.80. The stock remains an OUTPERFORM as this JV could catalyse a re-rating of E&O, along with 1) finalisation of approval for STP Phase 2 and 2) newfound management dynamism and lofty KPI targets.