Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
Company Name: IOI CORPORATION BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 4.64 |
IOI Corp Bhd (IOI MK, Hold, TP: RM4.64) is set to register at least US$226m (RM696m) or a 360% gain - on paper - from its investment in Indonesia-based Bumitama Agri Ltd. The latter has just filed for an IPO on the Singapore Exchange (SGX), which is said to fetch a market capitalisation of between S$1.2bn and S$1.3bn (RM2.9bn and RM3.2bn). According to a filing with Bursa Malaysia, IOI acquired a 33% stake in PT Bumitama Gunajaya Agro (BGA) in 2007 for US$62.6m. Its holdings shall be diluted to 30.4% upon completion of the IPO, according to Bumitama's prospectus filed with the Monetary Authority of Singapore. (Financial Daily)
Comment: According to sources with knowledge of the matter, Bumitama posted revenue of US$319.5m and net profits of US$85.3m for its FYE 31 Dec 2011. This values the company at 14x PE, which is in line with our valuation of IOI at 14x PE. Therefore at IPO pricing, there is no impact to our valuation, but we will see after shares start trading. Trading is slated to start during the week of 9 April. IOI's 30% stake in Bumitama would equate to net profits of US$28.2m (RM84.6m), representing half of IOI's FY11 associate profits of RM170.7m. (Aris Sharif)
Comment: According to sources with knowledge of the matter, Bumitama posted revenue of US$319.5m and net profits of US$85.3m for its FYE 31 Dec 2011. This values the company at 14x PE, which is in line with our valuation of IOI at 14x PE. Therefore at IPO pricing, there is no impact to our valuation, but we will see after shares start trading. Trading is slated to start during the week of 9 April. IOI's 30% stake in Bumitama would equate to net profits of US$28.2m (RM84.6m), representing half of IOI's FY11 associate profits of RM170.7m. (Aris Sharif)
Source: ECM Newz Bits 27 March 2012
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