Affin Research maintains Buy on Bonia, TP RM2.36

KUALA LUMPUR: Affin Investment Research is maintaining its Buy recommendation on Bonia Corporation with a target price of RM2.36 as the company's fundamentals and expansion plans remain intact.
The
research house had on Wednesday said it was positive on Bonia
distribution arm CRG Incorporated's (Carlo Rino) purchase of a new
RM20.9mil office block in Ulu Langat, Selangor for expansion.
Bonia is buying the property from Platinum Starhill Sdn Bhd and finance the purchase from its own funds and bank borrowings on a ratio of 30:70.
The
seven-storey office block, to be completed by end-2014, will reduce
Carlo Rino's overall rental cost while providing a larger office space.
Affin
Research said as of December 2012, Bonia's debt was RM16.2mil. If it
borrows RM14.7mil to finance the purchase, the group's total borrowing
will rise to RM88.7mil.
It said Bonia's net gearing ratio will
increase from 0.06 times to 0.13 times, but this is still manageable
judging from the group's healthy operating cash flow.
"Bonia's
fundamentals and expansion plans remain intact. Importantly, the stock
is currently trading at 8x, which in our view, is highly undemanding.
"We
maintain our Buy recommendation on Bonia, with target price unchanged
at RM2.36, pegging the stock at an unchanged 9.5 times CY13 EPS," said
the research house.