D.B.E. Gurney’s white knight. CIH managing director Datuk Johari Abdul Ghani, who owns 30% of the company, has expertise in turning around distressed companies and has been involved in the fast-moving consumer goods (FMCG) business as he holds managerial positions in companies such as KFC Holdings and QSR Brands. Hence, we believe that if the deal goes through, he may be able to transform D.B.E. Gurney, which has been racking up losses since 2006. After its share price run-up, the stock is currently trading at a high 56.3x PE.
Slight increase in net gearing. After paying out a special dividend of RM4.60 and taking into account the yet-to-be-paid capital repayment of RM0.50 per share, CIH will be left with a cash balance about RM79.5m. Assuming that the company buys a 100% stake in D.B.E Gurney at the latter’s current market cap of RM90.9m (PBV: 1.23x), CIH’s net gearing will tick up slightly to an insignificant 0.06%.
Maintain Take Profit. Given the uncertainties over its future acquisitions and limited share price upside, we maintain our Take Profit call on CIH, with a FV of RM0.99. This FV is based on 8x FY12 EPS for its DOE business and 8x PE for its soon-to-be acquired new business.
Slight increase in net gearing. After paying out a special dividend of RM4.60 and taking into account the yet-to-be-paid capital repayment of RM0.50 per share, CIH will be left with a cash balance about RM79.5m. Assuming that the company buys a 100% stake in D.B.E Gurney at the latter’s current market cap of RM90.9m (PBV: 1.23x), CIH’s net gearing will tick up slightly to an insignificant 0.06%.
Maintain Take Profit. Given the uncertainties over its future acquisitions and limited share price upside, we maintain our Take Profit call on CIH, with a FV of RM0.99. This FV is based on 8x FY12 EPS for its DOE business and 8x PE for its soon-to-be acquired new business.
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