OSK Research has downgraded HELP International Corp Bhd to Trading Buy from Buy following its share price appreciation recently.
However, it is maintaining its target price of RM4.30, which is based on 14 times price-to-earnings ratio (PER) on FY11 EPS plus a net cash of 68 sen per share.
“Due to the limited upside from the current share price following its sharp price appreciation recently, we are downgrading our recommendation from BUY to TRADING BUY.
“Despite the limited upside, we believe the positive sentiment arising from the proposed bonus issue would be a catalyst sustaining the positive momentum of the share price over the short term,” it said in a research note on Tuesday, July 20.
OSK Research said with potential improvement in its share liquidity following the proposed bonus, it did not rule out the possibility of assigning a higher PER multiple in its valuation for HELP in near future, in line with the PER valuation of its comparable peers.
Post ex-date for the proposed bonus issue, our current TP of RM4.30 will be adjusted to RM2.69.
On Monday, HELP proposed a three-for-five bonus issue as part of its corporate exercise. Its share price had surged 29 sen to a record high of RM4.05 ahead of the announcement. The corporate exercise involves the bonus issue of 53.26 million new shares on a three-for-five basis at an entitlement date to be determined later.
Written by OSK Research
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