KUALA LUMPUR: CIMB Equities Research has advised investors to accumulate shares of TH Heavy Engineering (THHE) following the recent share price fall brought about by the soft second quarter.
It said on Thursday THHE’s fabrication business was lumpy but it took comfort in the long-term nature of the floating production, storage and offloading (FPSO) business, which involved an eight +10 years US$372mil contract in May.
“Furthermore, the stock's valuations are undemanding at 9.0 times to 13 times FY15-16 earnings, lower than the sector average of 14 times to 16 times,” it said.
CIMB Research issued the report after THHE proposed to place out new shares of up to 10%, of which the first tranche of 5% or 52.796 million shares would be placed to Pelaburan Mara Bhd (PMB) at 80 sen a share.
“The gross proceeds of RM42m from the 5% placement will be used to facilitate THHE's yard expansion and FPSO venture. The 5% placement is slated for completion by mid-October,” it said.
CIMB Research said PMB is an investment and asset management company which is a unit of Majlis Amanah Rakyat (MARA), a government agency. PMB is buying a stake in THHE amidst the latter's operational improvement.
To recap, THHE went through a rough patch in 2Q, prompting it to make RM9mil provisions for the fabrication and transport & installation businesses.
“However, we understand that the company has returned to the black in 3Q and aims to secure a sizeable fabrication contract by year-end to expand its order book of RM1.5bil at end-August. PMB will be THHE's third largest shareholder, after Lembaga Tabung Haji (LTH) (31.6%) and Tan Sri Quek (9.1%)," said the research house.
After imputing the new shares from the 5% placement, the research house expects to lower its fully-diluted EPS by 1% for FY14, 4% for FY15 and 4% for FY16.
wa plays on sentiments, usually when a mother drops, wa drops more than mother.... if mother climbs fast, wa climbs even faster...... is good price, but can it go lower? just when to enter.....
warrant players be careful..... maturity date Dec-20-2014 which is very soon...... currently warrant still at a premium of around 8 cents based on closing price today..... warrant price will naturally converge to be on-par with mother share taking into consideration the exercise price as it closes in on maturity.......
@kamaru - if mother price rebounds before Dec by 8 cents of lower, or worst scenerio, mother price remain stagnant or drop, come Dec-2014, wa will be worthless..... my suggestion, if you feel it is currently cheap, it would be a lot safer to buy into the mother share.....
high risk high return, if market rebounds back above 60cents tmw, you will gain a lot from wa.... the final decision is always your own to make
Those who hold Warrant that going to expire this December, should buy the mother share once the share drop below 0.51 when margin call kick in. Bcos your warrant's right becomes worthless by then.
Post a Comment
People who like this
New Topic
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
Report Abuse
Please Sign In to report this post as abuse.
Market Buzz
No result.
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: Manufacturer of fortified F&B and dietary supplements, OB Holdings Berhad aims to list on the Ace Market!
MQ Trader 38 views | 3 h ago
0:17
New IPO: Precision engineering components manufacturer, Northeast Group Berhad aims to list on the Ace Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
zubairkedah
1 posts
Posted by zubairkedah > 2014-10-15 15:42 | Report Abuse
Apasal jatuh teruk angat ni......