Hot Stock Bonia third-largest gainer after Affin raises EPS, TP forecast

by **Cals** Mon 29 Jul 2013, 15:08

Hot Stock Bonia third-largest gainer after Affin raises EPS, TP forecast
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Monday, 29 July 2013 14:07

KUALA LUMPUR (July 29): Bonia Corp Bhd rose 5.32% to become the exchange's third-biggest gainer at midday break.

At 12:30 pm, Bonia was up 15 sen to settle at RM2.97 with 1.41 million shares changing hands. Investors had earlier bought the shares at between RM2.73 and RM3.04.

The gains came after Affin Investment Bank raised its earnings per share (EPS) forecast for the clothing retailer by 7.4% and 6.8% respectively in financial years ending June 30, 2014 (FY14) and 2015 (FY15) respectively.

The earnings upgrade has prompted Affin to raise its target price for Bonia shares by 65 sen or 25% to RM3.25. Affin however maintained its "buy" rating for Bonia.

In a note today, Affin analyst Mandy Teh said despite Bonia’s strong share price performance, the research house believes current valuations at 10 times price-earnings ratio for FY14 is still very attractive.

This compares to other retailers such as Aeon Co (M) Bhd and Parkson Holdings Bhd, which are respectively trading at 22 times and 14 times, said Teh.

According to her, Bonia shares have appreciated by 40% since Affin upgraded the retailer to a “buy” from “add” on March 19 this year.

Last Friday (June 26), the counter rose 28 sen or 11.02% to RM2.82 on trade volume of 1.12 million shares.

Teh said Affin's recent conversation with Bonia’s management indicates that demand for the latter's products remains “healthy”.

“We have revised our FY14 and FY15 EPS forecast higher by 7.4% and 6.8% each, implying a year-on-year EPS growth of 15% and 14% for FY14 and FY15 respectively,” she said.

Teh said the higher revision in Bonia’s earnings takes into account of its lower tax expenses and operating cost assumptions.

“We understand from management that the group’s boutique expansion plan is almost completed. Therefore, we expect Bonia to incur lower expansion cost going forward,” she noted.