Tanjong Plc BUY
Price target RM19.65
Share price at 15 April RM16.00
Investment summary
We raise our rating on Tanjong from a HOLD to a BUY. Following the recent market sell-down, Tanjong’s share price has fallen –14% YTD, despite sound positive fundamentals: (1) 12% EPS CAGR over FY08-10E from the Globeleq IPP acquisition; (2) valuation multiple expansion due to the potential spin-off of Tanjong’s power division and the local investment vacuum created by the Malakoff de-listing. We are negative on the Malaysian power sector, given poor domestic growth opportunities and dividend yield.
Playing the range
Share price has fallen to a 2-yr low, despite power generation capacity doubling in that period. Tanjong is historically a fundamental range-trading opportunity, and downside is limited at current levels.
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Sunday, 20 April 2008
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