CIMB bullish on Bonia’s international expansion, sets TP at RM8.11

by **Cals** Fri 11 Apr 2014, 01:29

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Thursday, 10 April 2014 16:07

KUALA LUMPUR (Apr 10): CIMB Research said that Bonia Corporation Bhd is becoming a truly regional premium brand and is bullish on its plans for international expansion.

The research house initiated coverage on the stock with an “add” rating and an initial target price of RM8.11 per share.

In a note today, the research house said that its aggressive expansion into markets such as Vietnam and Indonesia offers huge growth potential in the long term.

“Their huge populations, growing economies and rising middle classes provide a much larger scale than the combined markets of Malaysia and Singapore... In the long run, we expect the contribution from these markets to rise significantly and contribute positively to the group’s topline and earnings,” said Nigel Foo, analyst at CIMB Research.

On the company’s financials, Foo forecasts that Bonia’s net profit will continue to rise from FY14-FY16.

“We forecast that Bonia’s net profit will rise by 50.5% yoy in FY14, 21.3% in FY15 and 22.4% in FY16. This would translate into an impressive 30.7% 3-year net profit compounded annual growth rate (CAGR). The growth will be driven by the aggressive expansion in Bonia’s overseas operations, coupled with steady growth in its Malaysian and Singaporean operations. “

Foo added that the dividend payout ratio is expected to remain relatively unchanged at 24-25% in FY14-16.

“Our dividend per share forecasts are 8.0 sen in FY14, 9.5 sen in FY15 and 11.5 sen in FY16. This translates into an FY15 net dividend yield of 2.2%”

At 2:54 pm, Bonia share price was up 8 sen at RM5.23 per share with 824,900 shares traded.