Yesterday,  Bonia  (BON)  announced  that  its  wholly-owned  subsidiary, CRG  Incorporated  SB  (CRG),  has  entered  into  seven  sales  and purchases agreements (SPAs) with Platinum Starhill SB for the purpose of  acquiring  an  office  block  known  as  Block  C,  for  a  total  purchase consideration of MYR20.9m.  

-  Buys  office  for  Carlo  Rino  operation.  The  office  block,  located  in  Ulu Langat  in  Selangor,  comprises  seven  parcels  under  the  project  named “Platinum Starhill Business Centre”,  which  sits  on  a  total  area  of  about 41,873  sq  ft.  The  deal,  valued  at  MYR20.9m  or  MYR500  per  sq  ft,  was sealed on a willing buyer willing seller basis. This is the third office block purchased  by  the  group,  which  will  utilize  it  for  CRG’s  Carlo  Rino operation. 

 
-  Funding purchase with borrowings and internal funds. We deem the acquisition  fair  as  the  prices  of  similar  project  developments  in  the surrounding areas are changing hands at about MYR500-MYR570 per sq ft.  BON  will  settle  30%  of  the  purchase  price  with  internally-generated funds  and  the  remainder  by  borrowings.  As  of  Dec  2012,  BON  had  net debts  of  MYR16.1m  and  5.7%  net  gearing.  Upon  completion  of  the transaction, the company’s net debt will increase to MYR37m, which will 
bump  up  its  net  gearing  to  13%,  a  level  that  is  still  acceptable.  The acquisition is expected to be completed by FY14.

-  Maintain BUY. The stock is currently trading at a lower 8x P/E compared to  its  peers’ >10x.  We  maintain  our  BUY  recommendation,  with  our  FV unchanged at MYR2.62. This is based on 11x on FY13 EPS, pending the release of its results, scheduled for next week.

Source: RHB