Written by Financial Daily
Wednesday, 30 September 2009 11:37
STOCKBROKING and real estate player TA ENTERPRISE BHD []’s (TAE) potential has not gone unnoticed as global equity markets regained momentum, and investors eye an upturn in property markets amid a recovery in world economy.
HwangDBS Vickers Research, which has initiated coverage on TAE, said the firm was expected to post better financials in the coming quarters, prompting the research house to issue a buy call for TAE shares at RM1.39 with a target price of RM2.10.
Based on HwangDBS Vickers’ estimates, TAE’s revenue is expected to rise by an annual pace of 48%-65% in the financial years (FY) ending January 2011 and 2012 while net profit is anticipated to rise 16% to 24%.
“We are anticipating better performances in the coming quarters following the recovery in the stock market from the previous lows and, the return of consumers’ confidence and spending in the property market. In addition, revenue from hotel operations is expected to grow exponentially in the next two years with the addition of Westin Melbourne, Aava Whistler and Swissotel in the portfolio.” it said.
Within the Malaysian stockbroking fraternity, TAE is deemed a cheaper proxy to the improving trading volume of the local equities compared with BURSA MALAYSIA BHD [], the country’s stockmarket operator.
According to HwangDBS Vickers, Bursa’s valuations remained stretched at a price-to-earnings ratio (PER) and price-to-book (P/B) ratio of 32 times and five times FY09 earnings respectively.
TAE, meanwhile, trades at a PER of 16 times, and a P/B ratio of 0.9 times, based on the stock’s price of RM1.39.
By virtue of TAE’s strong retail business, the firm’s market share in the local stockbroking sphere had risen to 6.4% in the eight months to August this year from 3.8% in 2008.
TAE’s real estate, and hotel operations will be closely watched. This is in anticipation of the flotation of TA Global which will house the group’s property and hospitality businesses. At the same time, the market is anticipating some RM6 billion worth of property projects by the group till 2012.
These upcoming projects will be undertaken on Klang Valley prime land within the Kuala Lumpur City Centre and Jalan Bukit Bintang enclaves, besides Bandar Sri Damansara.
“As part of the restructuring and listing exercise, TAE’s shareholders will be paid a dividend-in-specie, in the form of TA Global shares. With the bulk of its prime landbank to be launched only upon the listing of TA Global, we believe TA Global’s earnings are set for an upswing. Hence, there will likely be potential appreciation in TA Global shares,” said HwangDBS Vickers which assumes that TAE will hold a controlling 55% stake in TA Global post listing.
TAE shares ended at RM1.48 yesterday, up nine sen.
This article appeared in The Edge Financial Daily, September 30, 200