Hot Stock Eksons rises 10.9% on land disposal

by **Cals** Thu 21 Nov 2013, 18:01

Hot Stock Eksons rises 10.9% on land disposal

Business & Markets 2013

Written by Zatil Husna of theedgemalaysia.com

Thursday, 21 November 2013 10:43

KUALA LUMPUR (Nov 21) : Eksons Corporation Bhd rose as much as 10.91% on land disposal news, as well as backed by an upgrade by CIMB research.

At 10.19am, the stock rose to RM1.22, up by 12 sen from RM1.10 with some 657,500 shares done.

CIMB research has upgraded the stock to ‘trading buy’ from ‘outperform’ with a revised upward target price (TP) of RM1.44 (from 98 sen) based on the assumption that land sale is completed, Eksons’ net cash per share will rise to RM1.18.

“We upgrade the stock from underperform to Trading Buy. Assuming that the Atmosphere land sale is completed, Eksons’s net cash per share rises to RM1.18,” it said.

The research firm firmly noted that the rise in net cash per share does not include the value of the group’s plywood manufacturing business, with the estimation of RM200 million for the replacement cost of the plywood business.

“Our target price for Eksons is raised to RM1.44, based on a 40% discount to our SOP valuation.

“The two reasons for the large SOP discount are, i) the company is not expected to pay out all of the land sale proceeds as management is looking to buy more landbank and ii) the plywood market conditions remain difficult.

“It would not be easy for the company to sell its plywood business even if it wanted to,” it said.

Eksons announced yesterday on the exchange that it expects to record a net gain of approximately RM52.3 million after minority interests, from the disposal of land in Selangor for the financial year ending March 31, 2015.

Eksons said the net gain is equivalent to approximately 32 sen per share.

The research firm said the announcement of land sale was a ‘positive surprise’ as the land sale price was very attractive, pricing at RM220 per square feet.

“We think that selling the land is a positive decision, given the competitive market conditions in the shopping mall property sector,” it said.

The company had earlier planned phase 3 to be a shopping mall for the Atmosphere project, which is in Seri Kembanga.