KUALA LUMPUR (Jan 16): RHB Research Institute has lifted its fair value for MBM RESOURCES BHD [] to RM3.90 (from RM2.70).
It said on Monday that the new FV was derived from applying a 6.9 times (10% premium to its five-year median price-to-earnings ratio (PER) target PER to 2012 earnings from 5.0 times.
The research house said MBM had completed the takeover of Hirotako (97 sen a share and 5.0 sen a warrant in cash) on Jan 3, after securing 96% of the offer shares and intends to compulsorily acquire the remaining shares.
“The total acquisition price of RM412.5 million valued Hirotako at 11.3.0 times 2010 PER, 14.5 times estimated 2011 earnings and 2.1 times 2011 price-to-book.
“All in, we consider the acquisition to be relatively expensive, relative to the 2012 median sector PER of 8.5 times and 7.0 times target PER multiple ascribed to APM.
RHB Research said its 2011 earnings estimates were broadly unchanged. After consolidating Hirotako’s earnings, it raised the 2012 and 2013 estimates by 3.7% and 10.5% to RM135.3 million and RM155.8 million respectively.
“We view MBM’s relatively aggressive moves to expand its automotive component manufacturing presence positively and upgrade our call on the stock to Outperform (from underperform),” it said.
It said on Monday that the new FV was derived from applying a 6.9 times (10% premium to its five-year median price-to-earnings ratio (PER) target PER to 2012 earnings from 5.0 times.
The research house said MBM had completed the takeover of Hirotako (97 sen a share and 5.0 sen a warrant in cash) on Jan 3, after securing 96% of the offer shares and intends to compulsorily acquire the remaining shares.
“The total acquisition price of RM412.5 million valued Hirotako at 11.3.0 times 2010 PER, 14.5 times estimated 2011 earnings and 2.1 times 2011 price-to-book.
“All in, we consider the acquisition to be relatively expensive, relative to the 2012 median sector PER of 8.5 times and 7.0 times target PER multiple ascribed to APM.
RHB Research said its 2011 earnings estimates were broadly unchanged. After consolidating Hirotako’s earnings, it raised the 2012 and 2013 estimates by 3.7% and 10.5% to RM135.3 million and RM155.8 million respectively.
“We view MBM’s relatively aggressive moves to expand its automotive component manufacturing presence positively and upgrade our call on the stock to Outperform (from underperform),” it said.
