Hot Stock Daibochi rises 3% on dividend, upgrade

by **Cals** Thu 07 Nov 2013, 14:14

Hot Stock Daibochi rises 3% on dividend, upgrade

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 07 November 2013 11:03

KUALA LUMPUR (Nov 7): Daibochi Plastic and Packaging Industry Bhd rose after it released favourable third-quarter results and announced a tax-free dividend.The firm's financials were underpinned by strong export demand and lower crude oil prices.

At 10.28am, Daibochi rose 10 sen or 3% to RM3.75 on a trade volume of 22,300 shares. It was the eighth-largest gainer across the exchange.

In a note, CIMB Investment Bank analyst Nigel Foo said securing major export orders and the further decline in oil prices could catalyse Daibochi shares.

Foo said he has upgraded Daibochi to "outperform" from "neutral" in view of likely lower raw material price risks. This follows the recent sharp fall in oil prices.

“We maintain our FY14-16 earnings per share forecasts but raise our target price (TP) as we roll forward to end-2015,” said Foo who has increased CIMB's TP for Daibochi to RM4.19 from RM3.68.

The TP is based on 13 times CY15 price-earnings ratio (PER) which is CIMB's sector PER target.

Looking ahead, Foo said CIMB expects Daibochi's production capacity to rise 20% to 30% resulting from the completion of its new factory.

He said installation of machinery should be done by the fourth quarter of this year and thus commercial production should start from February next year

CIMB has issued its note on Daibochi following the release of the company's third quarter financials yesterday.

"At an annualised 98% of our FY13 forecast, Daibochi’s 9MFY13 EPS was in line with market and our expectations as we expect a stronger 4Q," Foo said.

Meanwhile, Kenanga Research said it sees Daibochi’s immediate technical support and resistance levels at RM3.58 and RM3.67 respectively.