The stock price had adjusted lower after Tasco paid its dividends and also on weakness after the QoQ drop in earnings in 1Q2011 and on the overall market weakness. However, we reiterate sluggish growth in revenue and earnings at this time of the year are seasonal in nature and also in the nature of its warehousing business.
We now recommend investors position themselves for the earnings jump we now expect in 3Q-11 onwards. Our price target remains RM1.91 for a 23% upside placing our target earnings multiples at a still very modest 6.2x, compared to our estimated earnings growth of 23% and given the visibility of earnings on account of already confirmed sharp ramp-up in production at Panasonic and Sony and the recent acquisition of the Coca-Cola account. Current valuations remain extremely cheap at 5.0x PER, with prospective dividend yields in excess of 6%, offer a defensive buffer in a market downturn. The stock also trades at just 0.64x its prospective NTA per share. We continue to rate the stock a BUY.
We now recommend investors position themselves for the earnings jump we now expect in 3Q-11 onwards. Our price target remains RM1.91 for a 23% upside placing our target earnings multiples at a still very modest 6.2x, compared to our estimated earnings growth of 23% and given the visibility of earnings on account of already confirmed sharp ramp-up in production at Panasonic and Sony and the recent acquisition of the Coca-Cola account. Current valuations remain extremely cheap at 5.0x PER, with prospective dividend yields in excess of 6%, offer a defensive buffer in a market downturn. The stock also trades at just 0.64x its prospective NTA per share. We continue to rate the stock a BUY.
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