HLIB Research maintains calls on Rohas Tecnic, Axis-REIT

PETALING JAYA: HLIB Research, which is positive over loss-making Rohas Tecnic Bhd, maintained a 'buy' call on its shares, following the finalisation of its plans to acquire 75% stake in HG Power Transmission Sdn Bhd.
The research house has a price target of RM1.39 for the company, said the deal was attractive as the purchase consideration was "significantly below industry average and issue price."
Its share price fell two sen to close at RM1.13, with some 617,900 shares traded.
In addition, HG Power's orderbook which currently stands at more than RM400 million will give Rohas Tecnic's orderbook, which currently stands at RM 300 million, an added boost. Its net gearing is expected to be at 6% post-acquisition.
The acquisition valued at RM91.66 million will be funded by the issuance of new shares at 95 sen per unit, while the group will also be forking out RM22.5 million from internally generated funds.
HG Power, a transmission lines contractor has been profitable in the last three financial years and for FYE 31 Dec 2016, recorded a revenue of RM211 million and a profit after tax of RM10.2 million. Rohas Tecnic registered a net loss of RM20.3 million on revenue of RM53.25 million in the first quarter ended March 31, 2017.
Meanwhile, the research house maintained a 'hold' call on Axis Real Estate Investment Trust (Axis-REIT) at an unchanged price target of RM1.71. Its share price fell one sen to close at RM1.63 yesterday, with some 59,400 shares changing hands.
The group announced in a filing on Monday, that it is acquiring two new parcels of land and buildings in Kuantan for RM155 million, which will be funded by existing and new bank borrowings.
"We are positive on this yield-accretive acquisition with a net yield of 7% vis-à-vis its current yield of circa 5.3%. The property will be fully tenanted under long leasing term. Estimated impact to our earnings is circa +4-5% after financing cost. However, we make no changes to our forecast pending analyst briefing,"HLIB said.
Axis-REIT's net profit for the second quarter ended June 30, fell to RM23.27 million from RM36.45 million a year ago.
This was on only marginally lower revenue of RM41.64 million for the quarter under review, from RM41.78 million a year ago.