MKH Berhad; Buy; RM4.10
Price Target: RM5.40; MKH MK

MKH has proposed to undertake a 1-for-5 bonus issue scheduled for completion by 2QCY14. The proposed bonus issue is likely to enhance MKH shares’ marketability and trading liquidity which have been very encouraging since we initiated on 2 Jan 14. We believe the proposed exercise will help further improve investors’ confidence on the company as it has been consistently rewarding its shareholders (via bonus issues and dividends etc), in tandem with its stellar financial performance. To recap, MKH has been rewarding its shareholders over the past few years with 1-for-10 bonus issues.

We reiterate our high conviction pick on MKH with RM5.40 SOP-derived TP. We firmly believe that MKH is a rare gem that offers both deep value and explosive earnings growth trajectory. Current valuation at 7.5x FY15F EPS remains attractive given the highly visible and strong growth potential.

Source: HwangDBS Research - 12 Mar 2014