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Friday, June 14, 2013

Faber Group – Cheap Exposure To Healthcare (OSK)

Faber Group (FAB MK; FV = MYR2.34) – Cheap Exposure To Healthcare

¨      We met up with Faber Group’s management for an update on its operations following the release of its 1QFY13 results.
¨      Management highlighted that the new concession agreement will be inked soon upon the blessing of the Minister of Health Datuk Seri Dr Subramaniam Sathasivam.
¨      While this would likely translate into a loss of income in the long run, Faber is looking to take up the subcontractor role for an interim period of 6-12 months.
¨      Management is looking to expand its non-concession facilities management services, possibly by 20%-30% pa., with an eye on the O&G segment in particular.
¨      We are forecasting its non-concession segment to chalk in revenues of MYR65m-MYR70m pa. Upgrades to our estimates are likely should there be any major contract wins in the near term.
¨      Maintain our BUY call with our FV upgraded to MYR2.34 (from MYR1.94 previously) rolling forward our valuation to FY14. Its sturdy cash pile of MYR312.5m with minimal borrowings as of 1QFY13 translates into net cash per share of MYR0.85.

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