Hot Stock E&O rises as much as 12% after getting approval for multi-billion reclaimation project

by **Cals** Mon 14 Apr 2014, 17:44

Hot Stock E&O rises as much as 12% after getting approval for multi-billion reclaimation project

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 14 April 2014 15:02

KUALA LUMPUR (Apr 14): Shares of Eastern & Oriental Bhd (E&O) surged after the company obtained approval from the Department of Environment, Ministry of Natural Resources and Environment, for the reclamation works for phase 2 of Seri Tanjung Pinang.

According to AmResearch, the gross development value of this phase of project will total RM25 billion. The research house expects phase 2 to be developed over 15 years in two phases.

At 2.32 pm, E&O was traded at RM2.50, up 25 sen or 11%, with some 17.4 million shares done.

The counter was among the top gainers on the exchange and had earlier risen as much as 26 sen or 12% earlier.

E&O announced today that the DOE had approved the Detailed Environmental Impact Assessment (DEIA) study and conceptual masterplan for Phase 2 of Seri Tanjung Pinang.

Following the announcement, AmResearch Sdn Bhd said it is maintaining its “buy” call on E&O at RM2.25 but has raised its fair value (FV) to RM3.90 from RM3.00.

The research house has revised the FV of the stock upwards based on a 15% discount to its net asset value (NAV) of RM4.61 per share.

“We have assigned a significantly lower discount to our NAV as regulatory risks dissipate with the approval from the DOE for the DEIA study and conceptual masterplan for Seri Tanjung Pinang 2,” said the research house in a note today.

With the approval, the research house said E&O may soon call for tender proposals for the reclamation of phase 2 of Seri Tanjung Pinang after receiving approval from the state government.

Phase 2 of the development consists of the reclamation of some 760 acres of prime seafront land to create man-made islands opposite phase 1 of the project in Tanjung Tokong, Penang.

“Seri Tanjung Pinang phase 2 has a very high development potential because of its strategic location, sea-fronting land, exciting development concept and enticing architectural designs,” said AmResearch.