Shares of KFC Holdings Bhd (KFCH) rose by 10.11 per cent at midday today after MIDF Research reiterated its "buy" call on the stock and raised its target price to RM10.24 from RM8.95.
KFCH went up by 92 sen to close the morning session at RM10.02 after trading as low as RM9.70 this morning. A total volume of 10.858 million shares were traded.
The high valuation was in conjunction with KFCH's proposed a one-for-one bonus issue of up to 396.5 million new shares to improve liquidity and reward investors.
The fast food operator also proposed 31.7 million free warrants on the basis of one warrant for every 25 existing KFCH shares.
"We have raised our valuation for KFCH due to our estimates that value enhancement resulting from the proposed corporate exercise is expected to offset by additional cash outlay needed for warrants conversion in order to maintain QSR Brands Bhd's shareholdings level in KFCH as well as KFCH''s earnings contribution to QSR," MIDF Research said in its research note today.
The research house, however, kept its target price for QSR unchanged at RM4.04 with a "buy" recommendation.
Shares of QSR rose by 4.23 per cent or 15 sen to RM3.70 as at 12.30pm today.
"We continue to like KFCH on its sound fundamentals, impressive double-digit return-on-investment of 18.1 per cent in average for the past three years and strong brand name," MIDF Research added.
As at March 31, 2010, KFCH has 480 KFC restaurants in Malaysia, 77 in Singapore, nine in Brunei and two in India.
Meanwhile, OSK Research Sdn Bhd said KFCH was cut to “neutral” from “buy” because the shares have “limited” upside potential. -- Bloomberg
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