Posted by Rajuan_Singh > 2015-10-27 23:34 | Report Abuse

I hv compiled some of the contribution in E&O forum to give all a better & clearer understanding of E&O TP, it's supporting calculation, value and links. Apart from STP2 and UK foray, E&O is also developing Elmina West along Guthrie Corridor which they bought from Sime, while they are also developing the infrastructure there with GDV of RM1.5b while they hv on going projects in Iskandar - Medini with JV together with Khazanah and Temasek. (Ref to the links below) E&O Summary by EnO_Turboblast EnO_TurboBlast Few reason to Buy E&O - SUMMARY 1. Today closing volume @encouraging 1.356 Million transaction w 608k queuing to buy at 1.56 with buyrate at 80+% 8minutes from closing 2. Buy back treasury for dividen payout completed, distributed and should go up tomorrow onwards 3. Last 1 week - High buy rate but price remain suggest collection in progress 4. STP2 announcement anytime now which will add the deep value and RNAV of E&O and more options to move forward (JV, sell, develop, ...) With valued Ph2A at RM3.9b. This does not include Ph2B and 2C 5. UK PLC will ensure debt ratio is reduce to 0.38 (fr 0.6) while contributing 30% to parent. Listing on AIMS will happen by year end 2015. Noting that Loxley and Hammersmith Property will be 100% owned by E&O PLC 6. Target earning for 2015/2016 remain unchanjnmged at 173Million and overall 3 year target at 450Million still on track. Noting that E&O has in last 10 years achieved 9/10 of the target earning. 7. With low debt, high RNAV, with earning on target and past earning target achievement, E&O valued at between RM8 to RM10 per share upon the STP2 tender award (expected within this 1month -anytime now to November end), will be at steep discount 80.5%.. Even at TP2.60 (Public Bank call) it will be at 67% discount from it actual value. Calculations - Gregorian, EnO_Turboblast, Wondermama 1. How the RM3.9billion Phase 2A calculated STP2 will be divided into 2 portion i.e. a west and east side. And within that there is a Phase 2A (253acres) Phase2B (248Acres) and Phase 2C (259acres) which (2A) is the one that analyst believe will hv a marriage partner to co-developed. The partner and state govt will take 49% vs 51% owned by E&O. This can essentially be thought of as a 49% land sale or a valuation exercise or a risk management. Whichever it is, it will be a revenue top up either way. On Gregorians take at 2.51 without STP2, another short assumption is base on 2A 253acres (1.102e+7) will have approx (500-150 = RM350psf) this equate to RM3,857,000,000 . So basically even with cost against sale value they stand to make RM3.9B. Correct me if i am wrong 2. TP1 RM2.60 - Justification Debt ratio at current is 0.6 looking reduction 0.38. Ratio of that on inverse (0.6/.38 =1.58) on inverse base on current price at rm1.59 * 1.58 = RM2.51 very close to Public Banks RM2.60 trading buy. The calculation does not take into account STP2 psf value however base on RM150 psf as cost with expected RM400-500 psf value undeveloped sale the price will be higher. The number RM2.51 takes into account only the London PLC 3. TP2 RM3.50 - Justification Since no cooling further for property, and looking at previous Peak on July 16 2014 at rm3.18 closing the PE was 3.18/0.124 = 25.6. This was in anticipation of STP2 to attain deep asset value and RNAV. (Refer to earlier calculation done by all weeks ago for the value) now that STP2 award is within this two weeks or so, with the expected EPS to be at 0.137 (ie 173Million expected profit against 1.259billion shares) , the immediate peak price rally expected will be 25.6*0.137=3.50 On top of that, RM238 Million in value will be raise from UK Plc on AIMS by year end, of which 30% will be owned by E&O Bhd while cutting their debt ratio from 0.6 to 0.38 or lower from this exercise. With the two exercises happening, one which bring in the RNAV value of the share to between RM8 to RM10 (depending on the Gross cost difference reclaim and land value - refer to the earlier calculation ) the cost expected for reclamation at 150psf while value is between 400 to 500psf. This does not include the GDC and GDV. Hence even at RM3.50 against RM8 per share (assuming the lower of the value at RM400psf), it is already a steep discount. (4.50/8.00 *100= 60% discount) and this would be higher if we use RM10 with 500psf value. This entrench the deep value discussed earlier. Finally the UK PLC held at 30% interest by E&O Bhd can also be viewed as raising funds while the PLC is a caretaker because E&O Bhd can exercise the MGO at any point later with additional 3% interest take up once things pick up later Supporting information http://www.stockhut.com.my/news/70124 (E&O to develop RM1.5B infrastructure in Elmina West) http://www.easternandoriental.com/uploads/press-releases/PR_20150929_EO-Post-AGM.PDF (Summary info of E&O properties in KL, Iskandar - Medini, Penang, and UK)