E&O has deep value, says Affin Hwang Capital


PETALING JAYA: Affin Hwang Capital reiterated its long-term “buy” call on Eastern & Oriental Bhd (E&O) with a reduced target price of RM1.44, after a visit to the property developer’s Seri Tanjung Pinang Phase 2A (STP2A) project.

“We reduce our RNAV (revalued net asset value)/share to RM2.88 from RM3.12 previously to reflect the dilutive impact of the private placement. Based on the same 50% discount to RNAV, our target price is cut to RM1.44 from RM1.56. We see deep value in the stock as it is currently trading at price/RNAV of 0.3 times,” it said in its report.

According to Affin Hwang Capital, overall reclamation work is 73% complete at STP2A and the group is on track for full completion by end of 2019.

The reclamation work was initially slated for completion in June 2018, but was delayed to December 2019 due to complications encountered in undertaking large scale reclamation projects namely a 253-acre island and 131-acre Gurney Wharf.

The 131-acre Gurney Wharf will be handed over to the government upon completion.

“We saw a substantial portion of development land on the island has surfaced during our visit. We gather that non-financial foreign parties, including several from Singapore, are exploring joint venture opportunities with E&O to develop part of STP2A,” said Affin Hwang Capital.

Meanwhile, the entry of Tan Sri Wan Azmi Wan Hamzah as a strategic partner is expected to support E&O’s fund raising efforts to accelerate the development of STP2A.



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