OSK Research ups KPJ target price

OSK Research ups KPJ target price

Tags: corporate exercise | KPJ | OSK Research

Written by Joseph Chin
Friday, 02 October 2009 11:09

KUALA LUMPUR: OSK Investment Research is maintaining a Buy on KPJ Healthcare with an upgraded target price of RM4.98 from RM4.39 previously, after rolling its earnings per share (EPS) from FY09 to FY10 at 10 times price-to-earnings ratio (PER).

It said on Oct 2, despite the recent share price appreciation, KPJ is still trading significantly below its regional peers, which are trading at around 15 times to 25 times PER.

"We maintain our view that KPJ is an excellent choice for portfolio balancing as well as a long term investment given its relatively defensive business and steady dividend payout," it said.

On Oct 1, KPJ announced on Bursa Malaysia that it is proposing to undertake several corporate exercises involving a proposed 1-to-2 share split, bonus issue on the basis of 1 for 4 and a proposed issuance of up to 131.906m free warrants.

"While the proposals will not have direct impact on KPJ’s business operation, we welcome the news as we believe that the move could potentially improve the stock’s liquidity and marketability.

"Although we are unable to quantify the impact on liquidity, the proposals - which will result in a bigger share base – may potentially ease concerns over its current share liquidity," it said.

Following the completion of the proposals, KPJ’s share base will triple to around 659.53 million shares from 211.05 million shares currently.

OSK Research said nevertheless, the effectiveness of the proposals in improving liquidity in the shares will be dependent on the shares’ free float, which is in turn determined by the stake held its major shareholders.


http://www.theedgemalaysia.com/business-news/150474-osk-research-ups-kpj-target-price-.html