OSK Research has upgraded the target price of FABER GROUP BHD [] to RM4.00 from RM3.58 and maintained its Buy recommendation.
It said on Thursday, Sept 30, with Faber’s 15 year concession for government hospital support services (HSS) due for expiry in October 2011, it was looking at several possible outcomes related to the renewal.
These scenarios range from the worst case of “No Concession Renewal” to the best case of “2% p.a. inflation adjusted Rate Revision”.
“As our Base Case is for the concession to be renewed at the similar terms as the existing one, we are imputing the DCF value of the concession based on this assumption into our SOP valuation as well as valuing its non-concession IFM business separately.
"Subsequently our TP has been upgraded to RM4.00 from RM3.58 previously. With the sizeable upside we maintain our BUY recommendation at the higher TP of RM4,” it said.
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