We are adding 30,000 shares of Censof Holdings into our Thematic and Growth portfolios each at RM0.525 per share. Censof is principally involved in the design, development, implementation, and marketing of financial management software and services. The group’s GST-ready accounting software is likely to benefit should the government outline the details of GST roadmap in the upcoming budget 2014. Meanwhile, Censof is in the midst of acquiring 45.03% Time Engineering Berhad (“TEB”) stake from Khazanah Nasional Berhad. We believe massive synergistic benefits could be created under the proposed TEB acquisition. Apart from the products’ services synergies, the enlarged group could also likely benefit from an enlarged client base, better system integration and economies of scale. Our target price for Censof (based on the existing businesses), remains unchanged at RM0.61 based on a targeted FY14 PER of 15.5x. Nevertheless, should the proposed acquisition be concluded by end-CY13, the enlarged Censof’s FY14 net profit forecast would surge by 44% to RM22.2m from the current forecast of RM15.4m. This will boost our Censof target price to RM0.88 based on an unchanged targeted FY14 PER of 15.5x. 

 

Source: Kenanga