Bonia Corporation - Bag this stock now!

Date: 
2014-04-10
Firm: 
CIMB
Stock: 
BONIA
Price Target: 
8.11
Price Call: 
BUY
Last Price: 
1.67
Upside/Downside: 
+6.44 (385.63%)
Target RM8.11 (Stock Rating: ADD)
 
After lying low in the past few years to focus on internal restructuring and strategy realignment, local retailer Bonia is leading other Malaysian brands in becoming a truly regional premium brand. Its international expansion is a potential re-rating catalyst. We initiate coverage on the stock with an Add recommendation and target price of RM8.11. Our valuation is derived from 19.3x CY15 P/E, a 20% premium over our target market P/E, due to Bonia's relatively higher earnings growth trajectory. This implies that there is 62% upside to its current share price.
 
We initiate coverage on the stock with an Add recommendation and target price of RM8.11. Our valuation is derived from 19.3x CY15 P/E, a 20% premium over our target market P/E, due to Bonia's relatively higher earnings growth trajectory. This implies that there is 62% upside to its current share price. 
 
Premium local brand 
Bonia was founded in 1974 by Executive Chairman Mr S. S. Chiang and now operates a network of 1,027 sales outlets and 164 standalone boutiques throughout Asia, including Singapore, Malaysia, China, Taiwan, Japan, Vietnam, Thailand, Myanmar, Indonesia, Brunei, Oman, and Saudi Arabia. The group is primarily focused on the manufacturing of leather goods and shoes and their design, promotion and marketing under its in-house brands. In addition to its flagship fashion label, Bonia, the group's two other major in-house brands are Sembonia and Carlo Rino. Bonia is also involved in the distribution of clothing and footwear for other international brands. It is the licence holder for international brands such as Santa Barbara Polo & Racquet Club, Austin Reed, Valentino Rudy, Jeep, The Saville Row Company, Pierre Cardin, Bruno Magli, Enrico Coveri, Renoma Café Gallery and Renoma. 
 
Co-owner of Braun Buffel 
Bonia acquired a 70% equity stake in Jeco Pte Ltd in Dec 2010, which gives it the right to use the Braun Buffel trademark and makes it the exclusive brand representative in the Asia Pacific region. Braun Buffel contributed 20% of the group's overall 1HFY14 revenue. 
 
A premium brand at a discount 
The group's EPS is expected to more than double in three years' time. We estimate that Bonia's EPS will rise by 125% from RM0.21 in FY13 to RM0.46 in FY16, translating into 3-year EPS CAGR of 31.1%. We are of the opinion that the stock's current valuation does not reflect the company's earnings growth trajectory, as it is trading at only 12.5x FY15F P/E and 10.2x FY16 P/E.
 
Discussions
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alphajack

lai liao

2014-04-15 17:10

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