The severity of the floods in Thailand is making us turn even more cautious on
the feasibility of Eng Teknologi’s (Engtek) privatization offer. We believe the
financiers are likely to balk at the proposal and take a re-look only when they see
clearer signs of earnings visibility after the company’s production recovery,
which appears unlikely until 2Q12. Anyhow, near term sentiment is likely to be
dampened by the extended monsoon season, which could affect the appetite of
the financiers of the proposed acquisition. Hence we are downgrading our call to
SELL, with our Fair Value reverting to RM1.45, based on 0.7x FY12 P/NTA.
the feasibility of Eng Teknologi’s (Engtek) privatization offer. We believe the
financiers are likely to balk at the proposal and take a re-look only when they see
clearer signs of earnings visibility after the company’s production recovery,
which appears unlikely until 2Q12. Anyhow, near term sentiment is likely to be
dampened by the extended monsoon season, which could affect the appetite of
the financiers of the proposed acquisition. Hence we are downgrading our call to
SELL, with our Fair Value reverting to RM1.45, based on 0.7x FY12 P/NTA.
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