YNH : Pullout from the purchase of Menara YNH by KFH Outperform

News Update

YNHP yesterday received notification from KFH that it will not proceed with the purchase of 50% in Menara YNH office. We understand that YNHP will seek compensation for the cancellation of buying its property.
Given current financial crisis in the Middle East, the pullout by KFH is not a surprise to us. On the contrary, we view this positively as YNHP can now proceed with the sale to a second buyer to unlock the land value. The company is likely to lower its selling price by about 10% in order to secure the new buyer.
No change to earnings forecasts for now. Our indicative fair value has been lowered to RM2.19, based on 30% discount to its RNAV per share of RM3.13 (from RM2.54, based on 1.4x P/NTA due to the change in valuation method). Maintain Outperform.