April 22, 2011

CIHLDG - CIMB Research rates CI Holdings a Buy, TP RM4.78

Stock Name: CIHLDG
Company Name: C.I. HOLDINGS BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research said sugar was the main topic of discussion at the Thursday, April 21 post-3QFY6/11 briefing by CI Holdings Bhd.

It said on Friday, April 22 CIH has no plans to raise selling prices yet even though it is now paying a market price of around RM2.62/kg for sugar, 38% higher than the last subsidised price of RM1.90/kg.

'Other highlights are 1) a continued rise in sales of non-carbonated drinks, and 2) improvement of infrastructure through a new PET line. Our EPS forecasts are intact, which, together with an unchanged valuation basis of parity with our 14.5x CY12 target market P/E, keeps our target price at RM4.78.

'We continue to rate CIH a BUY and our top F&B pick given the potential catalysts of 1) an increasingly marketable product line, and 2) M&A. Thanks to its recent price weakness, the stock is now an attractive investment proposition, offering single-digit FY12-13 P/Es and 4.1% dividend yield,' CIMB Equities Research said.

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