Saturday, February 5, 2011

Bursa Target Hua Yang: Buy, target price RM1.60

WILSON & York Global Advisors Sdn Bhd said value investors will be attracted by the combination of solid earnings growth and profitability of property developer Hua Yang Bhd (5062). This is because the firm's earnings multiple was well below its peers'.

Wilson said looking ahead, average return of equity (ROE) is heading to levels of 10 per cent to 13 per cent, nearly double the average seen over the 2006 to 2009 period, while price-book value (P-BV) remains at or below 0.6 times.

The research house said compared to Hua Yang's peers in sales and market capitalisation, the company offers higher ROE at lower multiples.

It cited SP Setia Bhd, one of the sector heavyweights: "While growth expectations at SP Setia remain solid, investors must pay quite a premium as it currently trades on 2.9 times P-BV (price before valuation) and six times price earnings.
Hua Yang's year-to-date third quarter financial year 2010 revenue grew over 60 per cent year-on-year, while net profits grew more than 100 per cent over the same period.

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