KUALA LUMPUR: Public Investment Bank (PublicInvest) has increased DRB-HICOM Bhd’s target price by 16 per cent to RM2.54 after the latter proposed to dispose of non-industrial property assets and its entire hospitality portfolio totalling an estimated RM1.9 billion.
This is despite the disposal price of the hotel and golf resort in Glenmarie as well as Rebak Island, Langkawi being below Public IB’s valuation.
“The disposal is reasonable, although the disposal price is below what we have ascribed in our valuation at RM726 million,” the research firm said in a note.
PublicInvest said the Johor land that was acquired at a value of RM30 psf appears to be fair considering the disposal of land to Eco World Group Development Bhd at RM20 psf in April 2013.
PublicInvest is positive on the whole deal, saying it will help to unlock value of non-core property assets within the group and leverage on its experience in industrial property development.
“Based on our estimate this disposal will increase our target price by 16 per cent to RM2.54. Pending the completion of the deal, we maintain our forecast for now,” it said.
DRB-HICOM yesterday announced a disposal of several assets held by its subsidiary companies to Prisma Dimensi Sdn Bhd totalling to RM1.9 billion.
The proposed disposal involves ten property assets amounting to RM1.4 billion, 70.6 per cent stake in Horsedale Development for RM331.8 million and 100 per cent equity interest and 100 per cent redeemable preference shares in Rebak Island Marina for RM170.4 million.