CIH will distribute at least RM4 cash per share to shareholders and use the remaining net cash proceeds for potential acquisitions. While we expect its sanitary ware and tap ware (Doe) business to slow down, an acquisition may buffer any negative impact on earnings. We cut our FY12/13 earnings forecasts to RM25.8m and RM12.8m respectively to factor in: (i) a half-year contribution from Permanis for FY12, (ii) half year contribution from new acquisition in FY13 and (iii) interest income from the proceeds. These, coupled with higher cash distribution assumption to shareholders and the cash remaining after acquisition, bumps up our FV to RM5.53 (applying 8x FY12 EPS for its Doe and new business).
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