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



CIMB Research and OSK Research have maintained a "buy" call on CI Holdings Bhd (CIH), driven by the group's strong results of its beverage division despite rising cost and competition.

"Our target price goes up from RM3.90 to RM4.20, pegged to an unchanged 20 per cent discount to 15-time target market price to earnings in view of the stock's relatively low liquidity," CIMB Research said in a report today.

Another contributing factor was CIH's aggressive distribution drive and additional production capacity, it said.

As at June 2010, CIH's beverages reached 42,000 outlets nationwide, an improvement on 36,595 outlets as at June 2009.

The group recorded a total revenue of RM516.40 million, an increase of 42 per cent from the previous year.

Much of the growth came from a strong response to non-carbonated drinks, especially Tropicana Twister which was showing no signs of slowing down, said CIMB Research.

It now holds 35 per cent of the market, followed by Marigold Peel Fresh at 30 per cent, and Fruit Tree and Sunkist at 13 per cent.

OSK Research said CIH's new non-carbonated line, which is scheduled to begin operations in the coming September/October period would allow the group to launch more non-carbonated products from the new Tropicana flavours and Lipton range.

"We see potential in this segment as more new drinks are launched. However, we have some concerns over the competition from Minute Maid and Marigold which may eat into Tropicana's market share as the brands are now engaging in aggressive promotional activities," it said. -- Bernama