CIMB maintains outperform on UMW Holdings

KUALA LUMPUR: CIMB Equities Research maintained its "Outperform" on UMW Holdings
group and upgraded its earnings per share (EPS) forecasts to 1% to 7%
with higher realised net asset value-based target price of RM15.90 from
RM14.
"We upgrade our EPS forecasts by 1%-7% as we bring UMW
Holdings (UMWH) currency assumptions for its auto business in line with
the sector.
“Key catalysts for the stock are the oil and gas
(O&G) initial public offering (IPO) and capacity expansion of its
auto division," it said.
CIMB Research said upon the expected
completion of the IPO in Q4, 2013, UMWH will own 61% of UMW-OG with 39%
in free float. Proceeds from 231.4mil shares in the offer for sale will
go to UMWH and proceeds from the 611.8mil new shares will go to UMW-OG.
"UMWH
has revealed its plans for its O&G IPO where it intends to offer
39% of its drilling and oilfield services to the market. This is the
most profitable part of its O&G business, which is poised to see
significant growth over the next few years as all four of its rigs are
in operation," it said.
CIMB said UMW-OG made RM71.5mil in 2012
and expects the unit to perform better from 2013 onwards backed by its
oilrig operations.
"With 39% of UMW-OG in free float following
the IPO, we estimate that its financial year 2014 and 2015 EPS forecasts
could be cut by 5%," it said.