Hot Stock RGB's share price up 10% on positive talk

by **Cals** Tue 27 Oct 2015, 00:21

Hot Stock

[size=28]RGB's share price up 10% on positive talk

By Sangeetha Amarthalingam / theedgemarkets.com | October 26, 2015 : 4:54 PM MYT

KUALA LUMPUR (Oct 26): Penang-based RGB International Bhd ([You must be registered and logged in to see this image.] Valuation: 1.80, Fundamental: 2.10)'s share price rose as much as 1.5 sen or 10% today, possibly from positive market talk on its new investments in Nepal and Timor Leste.

As at 4.24pm, the stock was trading at 16.5 sen and the rally made it the most active stock across the local exchange, after some 65.6 million shares changed hands. The current price gives it a market capitalisation of RM195.4 million.

Conversely, the benchmark FBM KLCI has fallen 5.14 points to 1,705.79 points.

RGB, which sells and markets gaming equipment, has seen its share price trending upwards in the past 12 months, up 22.2% since the same period last year. In the past five days alone, it shot up 13.8%.

Interpacific Securities remisier Sam Ng said stockists speculations online might have created trading on the counter, which was only thinly traded previously.

Meanwhile, CIMB Research, in an Oct 20 note, said RGB International management believed that its newest markets in Timor Leste and Nepal promised good long-term potential.

That was if the company's partners manage to resolve licensing issues with the respective governments in Timor Leste, where it operates one outlet on a revenue share basis, and in Nepal, where it received a fixed fee, said CIMB Research analyst Marcus Chan.

"The bigger game plan in Timor Leste is to wait for better clarity on the permanence of licences before adding new outlets. In Nepal, RGB's ultimate aim is to enter the slots market in the Kathmandu casinos (there are 3–4 casinos in Kathmandu), which is again dependent on clarity of the licensing regime.

"Management guided for organic earnings growth of 5%–10% per annum based on existing operations, which is in line with consensus estimates. This does not take into account additional new outlets in new countries such as Timor Leste and Nepal. Management estimated that every new outlet in Timor Leste and Nepal could add 5%–10% to EPS per annum," said Chan.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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