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Wednesday, June 4, 2014

Salcon undervalued, stock could be worth RM1.20 – CIMB (Edge)

Salcon Bhd is undervalued. CIMB Investment Bank Bhd said shares of the builder could be worth RM1.20 each.

CIMB analyst Sharizan Rosely said the fair value for Salcon took into account the company's cash, which constitutes 76% of the firm's market value. Salcon shares rose two sen or 3% to 80.5 sen at 9.55am.

"Despite its relatively small market cap, we believe Salcon deserves to be valued at a narrower 20% RNAV ((revised net asset value) discount vs. its peers as its enlarged estimated net cash of over RM400m makes up 76% of its market cap.

"Using the EV (enterprise value) /net profit method and an estimated FY15-16 net profit of RM33m-38m, it is still cheap at 3-4x EV/net profit," Sharizan said.

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