Stock Name: FABER
Company Name: FABER GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research has downgraded FABER GROUP BHD [] to a a Trading Buy and lowered its sum-of-parts (SOP) valuation from RM4 to RM3.39.
It said on Thursday, Jan 13, the downgrade followed the non-renewal of two contracts of Faber's Abu Dhabi-based subsidiary Faber Ltd Liability Co. (FLCC). The contracts have an estimated value of RM184 million per annum.
'Despite the still-sizeable price upside, we are downgrading our recommendation from BUY to Trading Buy, largely because non-renewal of the contracts will dampen sentiment and create some uncertainty over the fate of Faber's existing concession in Malaysia,' it said.
OSK Research said nevertheless, with Abu Dhabi's Western Region Municipality (WRM) expected to invite a fresh round of tenders for its infrastructure contracts, the potential upside catalyst for Faber would be the possibility the company secures new contracts from WRM.
Another catalyst would be the renewal of its concession in Malaysia which could possibly be announced anytime.
'We also believe that the revenue shortfall resulting from non-renewal of the UAE contracts will be partly mitigated by improving prospects for Faber's property division,' it said.
Company Name: FABER GROUP BHD
Research House: OSK
KUALA LUMPUR: OSK Research has downgraded FABER GROUP BHD [] to a a Trading Buy and lowered its sum-of-parts (SOP) valuation from RM4 to RM3.39.
It said on Thursday, Jan 13, the downgrade followed the non-renewal of two contracts of Faber's Abu Dhabi-based subsidiary Faber Ltd Liability Co. (FLCC). The contracts have an estimated value of RM184 million per annum.
'Despite the still-sizeable price upside, we are downgrading our recommendation from BUY to Trading Buy, largely because non-renewal of the contracts will dampen sentiment and create some uncertainty over the fate of Faber's existing concession in Malaysia,' it said.
OSK Research said nevertheless, with Abu Dhabi's Western Region Municipality (WRM) expected to invite a fresh round of tenders for its infrastructure contracts, the potential upside catalyst for Faber would be the possibility the company secures new contracts from WRM.
Another catalyst would be the renewal of its concession in Malaysia which could possibly be announced anytime.
'We also believe that the revenue shortfall resulting from non-renewal of the UAE contracts will be partly mitigated by improving prospects for Faber's property division,' it said.
No comments:
Post a Comment