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IPO 7-Eleven Malaysia valuations stretched, TP seen at RM1.24 — TA

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IPO 7-Eleven Malaysia valuations stretched, TP seen at RM1.24 — TA Empty IPO 7-Eleven Malaysia valuations stretched, TP seen at RM1.24 — TA

Post by Cals Fri 16 May 2014, 02:08

IPO 7-Eleven Malaysia valuations stretched, TP seen at RM1.24 — TA
Business & Markets 2014
Written by Chong Jin Hun of theedgemalaysia.com   
Thursday, 15 May 2014 11:29

KUALA LUMPUR (May 15): Bursa Malaysia Main Market-bound 7-Eleven Malaysia Holdings Bhd's valuations have been deemed stretched, prompting a research house to place a lower target price of RM1.24 for the stock, compared to its indicative issue price of RM1.38.

TA Securities Holdings Bhd, in a note today, held that 7-Eleven Malaysia's valuations were stretched versus other retail stocks, the FBM KLCI, and peers with regional presence that are more superior in terms of market capitalisation, net margins, and dividend yields.

"We value 7-Eleven at RM1.24/share based on a FY15 EPS of 6.2sen/share pegging a PE of 20x. Unattractive dividend yield of 1.0%-1.8% between FY14-FY16 on the back of a 30% payout," TA said.

Nonetheless, TA said merits of 7-Eleven Malaysia included its dominant 82% market share in the convenience-store segment, strong brand name, and position as the sole operator of 7-Eleven convenience stores within Malaysia and Brunei until 2033.

The IPO of 7-Eleven Malaysia involves an offer for sale of up to 348.9 million existing shares and a public issue of 181.4 million new shares. The indicative retail share price is RM1.38 each.

The firm is scheduled for listing this May 30.
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