KUALA LUMPUR: AmResearch has reaffirmed its Buy call on Easten & Oriental (E&O) with an unchanged fair value of RM4.73/share, based on a 50% discount to our NAV of RM9.47/share.
"Our NAV is based on an assumed land value of RM500psf for Sri Tanjung Pinang 2 (STP2). The ex-date for E&O’s 1-for-10 bonus issue of up to 114.1mil and 1-for-5 warrants of up to 228.2mil is set for Jan 20.
"We advise investors to accumulate the stock in view of the current share price weakness. The key catalyst hinges on E&O’s execution to monetise land value at STP2 to set the benchmark price. This, we opine, will result in a significant renewed buying interest for E&O," it said in a note on Friday.
It said the take-up rate for Tamarind should be encouraging due to the affordable prices.
"Selling price is expected to come below RM1,000psf or RM1mil/unit given Tamarind’s feature as a mainstream product, unlike E&O’s other niche developments.
"Ivory Properties’ City Residence nearby is selling between RM900psf and RM1,000psf, while units for the Fettes Residences development by IOI Properties
are currently transacted between RM850psf and RM900psf," it noted.
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