STOCK FOCUS OF THE DAY
Sunway : Proposed bonus issue seen
positive
BUY
We make no changes to our FY17-19F earnings forecasts, and
maintain our BUY call on Sunway with an unchanged SOP-based fair value of
RM3.81 per share. This was derived after applying a 20% discount to its
property development division’s RNAV, and pegging its construction division at
14x CY18F P/E, in line with our target P/E of 13-15x for mid-sized construction
stocks. Sunway has proposed to undertake a bonus issue exercise of up to 2.8bil
new shares on the basis of four bonus shares for every three existing shares
held (4-for-3) on an entitlement date to be determined later. This is to be
effected by way of capitalising the share premium of the company. It has also
proposed a bonus issue of up to 631.0mil free warrants in Sunway on the basis
of three warrants for every 10 existing shares held (3-for-10) on the same
entitlement date as the proposed bonus issue. The proposals are expected to be
completed by 2H17.
We are positive on the proposed bonus issue of shares and
warrants. We expect the marketability and trading liquidity of Sunway shares to
be improved by the larger capital base and lower price per share. On the bonus
issue of warrants, assuming full exercise of the warrants at an indicative
exercise price of RM1.53 per share, the company could potentially raise the
maximum gross proceeds of RM965.4mil. Although in the short term the warrants
might be dilutive to the EPS, we believe in the long term, the proceeds will be
utilised to grow the company further, which will be positive to its long-term
EPS growth.
Others :
Axiata Group : Celcom’s troubles underscore re-merger
need
BUY
Berjaya Food: Challenges remain
HOLD
Astro Malaysia : Ala carte packs to cushion subscription
revenue
HOLD
STOCKS ON RADAR
Dagang NeXchange,Only World Group,GUH Holdings,Mah Sing
Group
ECONOMIC HIGHLIGHT
US : Fed maintains optimistic tone
NEWS HIGHLIGHTS
Salcon : New investments to see profit — Salcon
JAG : JAG eyes 25%-30% revenue growth in FY17
SP Setia : SP Setia: Shangri-La to run Melbourne hotel
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