KUALA LUMPUR (April 24): MIDF Research has upgraded Eastern & Oriental Bhd to a buy with a target price of RM 1.70 after the company proposed to acquire an office cum retail building known as Princes House, located at 37-39 Kingsway, London WC2b 6TP, United Kingdom.
In a note Tuesday, MIDF Research said The purchase consideration is £20.3m which translates to about RM100.9m (based on £1:RM4.983 @ 23 Apr 12).
The research house said that assuming the remaining 90% of the building is fully leased out with rental rate similar to that paid by the ground floor tenant, Prince House would generate gross rental yield of about 6.5%.
However, MIDF Research said it did not expect the vacant space to be filled up so soon.
“At current juncture, E&O has not disclosed its future plans for the building. Hence, pending further details, we are maintaining our earnings forecast for E&O.
“We are upgrading our Recommendation for E&O to BUY with an unchanged target price of RM1.70 which is a 20% discount against RNAV of RM2.12,” it said.
MIDF Research said the recent retracement of property companies’ share prices has rendered E&O’s share price attractive, with projected total return of more than 15%.
“At yesterday’s closing price of RM1.42, investors would be paying 38% lower than what Sime Darby paid for its stake in E&O at RM2.30 per share,” it said.
In a note Tuesday, MIDF Research said The purchase consideration is £20.3m which translates to about RM100.9m (based on £1:RM4.983 @ 23 Apr 12).
The research house said that assuming the remaining 90% of the building is fully leased out with rental rate similar to that paid by the ground floor tenant, Prince House would generate gross rental yield of about 6.5%.
However, MIDF Research said it did not expect the vacant space to be filled up so soon.
“At current juncture, E&O has not disclosed its future plans for the building. Hence, pending further details, we are maintaining our earnings forecast for E&O.
“We are upgrading our Recommendation for E&O to BUY with an unchanged target price of RM1.70 which is a 20% discount against RNAV of RM2.12,” it said.
MIDF Research said the recent retracement of property companies’ share prices has rendered E&O’s share price attractive, with projected total return of more than 15%.
“At yesterday’s closing price of RM1.42, investors would be paying 38% lower than what Sime Darby paid for its stake in E&O at RM2.30 per share,” it said.
