It has raised its financial year 2011 and 2012 forecasts by 16 per cent and 19 per cent to RM46.1 million and RM52.8 million respectively, factoring in sales contribution from Singapore-based Jeco Pte Ltd, higher depreciation costs and interest expenses as well as leakages.
Target price was raised to RM1.83 from RM1.54.
The research firm is positive on Jeco acquisition, given that it will potentially complement and increase Bonia's range of offerings, help to eliminate competition from these brands, expand its market share in Malaysia and Asia-Pacific, and realise cost synergies which could enhance Bonia's margins.
Bonia is acquiring Jeco at 5.4 times based on the aggregate audited financial statements of Jeco and subsidiary Lianbee-Jeco Pte Ltd of S$7.4 million (RM17 million), or 8 times price to earnings ratio based on Jeco's guaranteed net profit of S$5 million (RM11.5 million), which OSK Research thinks is inexpensive considering the bright prospects of Jeco and earnings enhancement to Bonia.
Funding is also not an issue, in view of the group's strong cash position of RM69.2 million (as at June 2010). There is also room for more borrowings, given the company's low gearing of 14.4 per cent as at June 2010.
No comments:
Post a Comment