Stock Name: BONIA
Company Name: BONIA CORPORATION BHD
Bonia Corp Bhd
(Aug 4, RM1.69)
Maintain buy at RM1.74 with target price of RM2.45: Bonia announced via Bursa Malaysia on Wednesday that its 60%-owned subsidiaries, Apex Marble Sdn Bhd and Mcore Sdn Bhd, filed a civil suit in the High Court against Leong Tat Yan for alleged breaches of contract and fiduciary duties in connection with a joint venture in Vietnam. Recall that in 2002, Bonia entered into a JV agreement with Leong Tat Yan for the sale of Bonia's products in Vietnam. However, Bonia claims that Leong has breached the terms of the agreements by failing to furnish the required financial records, sales proceeds as well as access to stock information. Via its subsidiaries, Bonia is seeking a total of RM3.2 million from Leong (who owns 40% of Apex and Mcore).
The civil suit is not expected to have an operational impact on Bonia. We note that the Vietnam business is a relatively small contributor to total sales, compared with Malaysia and Singapore, which make up 75% and 17% of sales. The remaining 8% consists of sales contribution from various countries, including Vietnam, Japan, Hong Kong, China and Indonesia.
According to the statement, the losses arising from the JV business amounting to RM5.4 million will be provided for in the upcoming 4QFY11 ended June results. Thus, we lower our FY11 headline net profit forecast by 12.5% to RM37.7 million. Our FY11 core net profit forecast, however, remains unchanged at RM43.1 million.
We maintain our 'buy' recommendation, with an unchanged target price of RM2.45, pegged to a price-earnings ratio of 10 times on CY12 earnings per share. Bonia will release its full-year FY11 results in the last week of August. We expect earnings to be supported by its 2010 acquisition of the Singapore-based Jeco Group, which provides a broader customer base and a larger market for luxury brands. Key risks to the stock are reduced disposable income from: (i) higher food inflation, in tandem with rising global food prices, and; (ii) the government's agenda in rolling back subsidies. ' Affin IB Research, Aug 4
This article appeared in The Edge Financial Daily, August 5, 2011.
Company Name: BONIA CORPORATION BHD
| Research House: AFFIN | Price Call: BUY | Target Price: 2.45 |
Bonia Corp Bhd
(Aug 4, RM1.69)
Maintain buy at RM1.74 with target price of RM2.45: Bonia announced via Bursa Malaysia on Wednesday that its 60%-owned subsidiaries, Apex Marble Sdn Bhd and Mcore Sdn Bhd, filed a civil suit in the High Court against Leong Tat Yan for alleged breaches of contract and fiduciary duties in connection with a joint venture in Vietnam. Recall that in 2002, Bonia entered into a JV agreement with Leong Tat Yan for the sale of Bonia's products in Vietnam. However, Bonia claims that Leong has breached the terms of the agreements by failing to furnish the required financial records, sales proceeds as well as access to stock information. Via its subsidiaries, Bonia is seeking a total of RM3.2 million from Leong (who owns 40% of Apex and Mcore).
The civil suit is not expected to have an operational impact on Bonia. We note that the Vietnam business is a relatively small contributor to total sales, compared with Malaysia and Singapore, which make up 75% and 17% of sales. The remaining 8% consists of sales contribution from various countries, including Vietnam, Japan, Hong Kong, China and Indonesia.
According to the statement, the losses arising from the JV business amounting to RM5.4 million will be provided for in the upcoming 4QFY11 ended June results. Thus, we lower our FY11 headline net profit forecast by 12.5% to RM37.7 million. Our FY11 core net profit forecast, however, remains unchanged at RM43.1 million.
We maintain our 'buy' recommendation, with an unchanged target price of RM2.45, pegged to a price-earnings ratio of 10 times on CY12 earnings per share. Bonia will release its full-year FY11 results in the last week of August. We expect earnings to be supported by its 2010 acquisition of the Singapore-based Jeco Group, which provides a broader customer base and a larger market for luxury brands. Key risks to the stock are reduced disposable income from: (i) higher food inflation, in tandem with rising global food prices, and; (ii) the government's agenda in rolling back subsidies. ' Affin IB Research, Aug 4
This article appeared in The Edge Financial Daily, August 5, 2011.
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