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Published: Wednesday May 15, 2013 MYT 10:39:00 AM

Affin Research maintains Buy on Bonia, TP RM2.36


KUALA LUMPUR: Affin Investment Research is maintaining its Buy recommendation on Bonia Corporation with a target price of RM2.36 as the company's fundamentals and expansion plans remain intact.

The research house had on Wednesday said it was positive on Bonia distribution arm CRG Incorporated's (Carlo Rino) purchase of a new RM20.9mil office block in Ulu Langat, Selangor for expansion.

Bonia is buying the property from Platinum Starhill Sdn Bhd and finance the purchase from its own funds and bank borrowings on a ratio of 30:70.

The seven-storey office block, to be completed by end-2014, will reduce Carlo Rino's overall rental cost while providing a larger office space.

Affin Research said as of December 2012, Bonia's debt was RM16.2mil. If it borrows RM14.7mil to finance the purchase, the group's total borrowing will rise to RM88.7mil.

It said Bonia's net gearing ratio will increase from 0.06 times to 0.13 times, but this is still manageable judging from the group's healthy operating cash flow.

"Bonia's fundamentals and expansion plans remain intact. Importantly, the stock is currently trading at 8x, which in our view, is highly undemanding.

"We maintain our Buy recommendation on Bonia, with target price unchanged at RM2.36, pegging the stock at an unchanged 9.5 times CY13 EPS," said the research house.

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