Fitters Diversified; Buy; RM0.86
Price target: RM0.95; FIT MK

Fitters announced that it has proposed to list it wholly-owned subsidiary Future NRG Sdn Bhd (FNRG) on Catalyst, the sponsor-supervised board in Singapore. The listing is subject to the approvals of Fitters’ shareholders and relevant authorities.

There are scarce details on the listing plan at this juncture but we understand that FNRG will be the Group’s flagship arm for the renewable energy business, focusing on: 1) biomass to renewable energy, 2) waste to energy (municipal, industrial, medical waste); and 3) sustainable palm oil mill. FNRG’s main asset includes the 60MT palm oil mill in Kuala Ketil, Kedah.

We are neutral on the potential listing of FNRG given the insignificant contribution of its renewable energy business. The renewable energy division contributes RM1.2m pretax profit in 9M13, accounting for a mere 3% of the Group’s pretax earnings. Nevertheless, the listing may help to raise proceeds to further grow the business.

We maintain our Buy rating on Fitters with SOP-derived TP of RM0.95. Fitters’ growth prospects will be anchored by its property division going forward, particularly its Rawang project on a 50-acre land which is estimated to carry RM300m GDV.

Source: HwangDBS Research - 13 Jan 2014