INVESTMENT HIGHLIGHTS

• Myanmar Investment Committee approves JV agreement between Daibochi and Myanmar Smart Pack

• Positive on this development as the venture into Myanmar is on track

• New venture could add 20% to FY18 PBT

• Maintain NEUTRAL with TP of RM2.54 (ex-price of RM2.11)

Myanmar Investment Committee (MIC) approves JV agreement. Daibochi’s joint venture agreement with Myanmar Smart Pack (MSP) has been approved by MIC. The agreement in which Daibochi agrees to buy a 60% stake in MSP for USD6.8m (RM30m) was announced last November. Following the approval from MIC, Daibochi targets to start operations within a month. With the approval, Daibochi will be ready to commence exports from the Myanmar operations to ASEAN countries in the 3QFY17.

One step closer to a new milestone. We are positive on this development as the venture into Myanmar is on track. We believe that this venture could further escalate Daibochi’s export ambitions as operating costs there is expected to be much lower than that of Malaysia. Daibochi could also tap directly into the talent pool in Myanmar through this venture. It should be able to capture new sales and market as MSP has traditionally been strong in fast moving consumer goods packaging, which is a different segment from Daibochi’s predominantly strong food and beverage packaging.

New venture could add 20% to FY18 PBT. We expect this venture to positively contribute to Daibochi’s PBT in FY17 and FY18 by +5% and +20% respectively.

Impact on earnings. No changes to our earnings estimates as we have imputed these assumptions into our forecast in our report dated February 28.

Maintain NEUTRAL with TP of RM2.54 (ex-price of RM2.11).

We maintain our Neutral stance on Daibochi with an unchanged TP of RM2.54 per share based on the dividend discount model (DDM). Our ex-bonus TP will be adjusted to RM2.11 following the announcement of a 2 bonus shares for 10 shares by the company in April.

Source: MIDF Research - 4 May 2017