AmResearch reaffirmed its BUY rating on Cocoaland Holdings (Cocoaland) with higher fair value of RM3.70/share (previously RM3.60/share).
It said on Friday, Sept 24 the higher fair value was based on target PE of 16 times FY11F earnings.
“We tweaked our FY11F and FY12F earnings forecast higher by 6%, taking into account the group's accelerated PET bottling expansion plan - as revealed during a company visit recently,” it said.
At more than 2.0 times the rate as initially planned, plans are afoot for installation of three additional lines, bringing total installed capacity from 120 million to 480 million bottles per annum by F12F.
“More importantly, our positive view of the group's growth trajectory has been reinforced, as secured high off-take rates by Fraser & Neave Holdings (F&N) from existing and upcoming second production line will truncate downside risks of idle capacity,” it said.
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