Sunday, September 5, 2010

DRBHCOM Worth A Short Term Trade

Not my preference but i think this counter worth a short term trade. Yes, the stock that i mentioned here is DRBHICOM. DRBHICOM's business derive from the followings sector:-

Automotive 57%
Property & Construction 3%
Services 40%

See its recent insight :-

Sep-08 Completed acquisition Rangkai Positif and 70% Bank Muamalat Malaysia through new issue of 926m shares.
Nov-08 Setup an automotive cluster in Saudi Arabia.
Jan-09 Acquire 3 land areas in JB for RM722m, abt half will be financed by sale of its 5 plantation areas for RM341m.
Jun-09 Minimal impact on its JV from the bankruptcy of GM in US, as they are separate entities.
Dec-09 Announced discontinution of its JV with GM to distribute Chevrolet vehicles in Malaysia.
Jan-10 Proposed a 32% capital reduction in 79% subsidiary EON, to take it private. It is in preliminary discussion to dispose Bank Muamalat stake to Bahrain banking group, Al Baraka.

Recent dividend of 2.5sen was announced. A mere DY of 2% based on current price of RM1.14. 1Q EPS registered a 8.16sen, increase by 300% from its corresponding Q. Taking its rolling 4Q as forecast, we get an EPS of 30.12sen for full year, that would means a PE of 1.14/30.12 = 3.78sen. My simple way of FV = 4 x 30.12 = RM1.20. Another 6sen upside from RM1.14, worth for a short term trade.

The benefits are :-
a) ride on 2nd & 3rd liners wave now.
b) recovery is expected to gain momentum. (Strong growth expected for Malaysian Auto Industry)
c) CI expected to remain resilient
d) GLC player
e) At current price at RM1.14, down side is low and potential up side is great.

The set back are:-
a) EPF is disposing a lot....
b) Profit is damn volatile

1 comment:

Anonymous said...

I been looking at DRM Hicom for quite sometimes but still thinking about to buy or not. What is the target price?

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