Stock Name: FABER
Company Name: FABER GROUP BHD
Research House: OSK
Faber Group Bhd
(June 30, RM2.67)
Maintain buy at RM2.56 with target price of RM3.58: Although we are slightly surprised with the unconfirmed news that the UEM Group might dispose of its stake in Faber, it is nevertheless within UEM's restructuring plan to focus on its core business. With neither Faber nor UEM having commented on the matter, the potential disposal largely remains a rumour at this juncture. As we believe a potential disposal would largely involve a change in shareholding without affecting Faber's business direction, the market seems to have unjustifiably over-reacted to the rumour, especially since the company's fundamentals and future prospects remain intact.
Although our sources were unable to confirm the rumour, we believe the potential disposal might be in the pipeline. However, we think that it may not happen so soon as the decision whether or not Faber's concession is renewed by the government will only be known in October. The concession renewal would probably be a requirement before a buyer agrees to the pricing.
With Faber's diversified business consisting of Integrated Facilities Management (IFM) for healthcare concessions and non healthcare, as well as property development, we believe it would be rather difficult to find a strategic buyer for the group. As such, we believe the disposal would most likely attract passive investors or buyers rather than strategic buyers.
With the potential disposal by UEM still remaining a rumour and even if it does materialise, we believe that Faber's business fundamentals will remain intact. As such, we maintain our forecast and buy recommendation at an unchanged target price of RM3.58 based on sum-of-parts valuation. Following the sharp price correction over the last two days, we believe that the current price level is attractive. Faber's current valuation is an attractive 9.7 times and 8.9 times PER on FY10 and FY11 EPS respectively. ' OSK Research, June 30
This article appeared in The Edge Financial Daily, July 1, 2010.
Company Name: FABER GROUP BHD
Research House: OSK
Faber Group Bhd
(June 30, RM2.67)
Maintain buy at RM2.56 with target price of RM3.58: Although we are slightly surprised with the unconfirmed news that the UEM Group might dispose of its stake in Faber, it is nevertheless within UEM's restructuring plan to focus on its core business. With neither Faber nor UEM having commented on the matter, the potential disposal largely remains a rumour at this juncture. As we believe a potential disposal would largely involve a change in shareholding without affecting Faber's business direction, the market seems to have unjustifiably over-reacted to the rumour, especially since the company's fundamentals and future prospects remain intact.
Although our sources were unable to confirm the rumour, we believe the potential disposal might be in the pipeline. However, we think that it may not happen so soon as the decision whether or not Faber's concession is renewed by the government will only be known in October. The concession renewal would probably be a requirement before a buyer agrees to the pricing.
With Faber's diversified business consisting of Integrated Facilities Management (IFM) for healthcare concessions and non healthcare, as well as property development, we believe it would be rather difficult to find a strategic buyer for the group. As such, we believe the disposal would most likely attract passive investors or buyers rather than strategic buyers.
With the potential disposal by UEM still remaining a rumour and even if it does materialise, we believe that Faber's business fundamentals will remain intact. As such, we maintain our forecast and buy recommendation at an unchanged target price of RM3.58 based on sum-of-parts valuation. Following the sharp price correction over the last two days, we believe that the current price level is attractive. Faber's current valuation is an attractive 9.7 times and 8.9 times PER on FY10 and FY11 EPS respectively. ' OSK Research, June 30
This article appeared in The Edge Financial Daily, July 1, 2010.
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