Narra - Can Narra Still Fetch Such High Valuation Post Exercise?

Tan Sri Quek is injecting HL Group’s building material assets into struggling furniture maker. This is expected to revive Narra’s financial health.

After the corporate exercise that involves an injection of HL’s cement and concrete manufacturing business into it, Narra will have a pro forma historical EPS of 3.11 sen for the financial year 2014 ended June 30.

Based on this, Narra’s shares are currently (20 June 2014) trading at a PER of 148 times on the enlarged share base which is above the industry average of 19.79 times.

Surely Narra will reap value from the backdoor listing of Hume Ind and Hume Cement.

However Narra’s accumulated losses would increase to rm151 million after the asset injection due to goodwill paid for the two companies.

Nevertheless it was reported that Narra’s earning are set to surge after the proposed exercise with HCement contributing nearly 90% of its earnings in FY2015 ending June 30 and the rest from its concrete business.

Estimated that Narra’s profit will jump to rm72 million in FY2015, the first financial year that the company will recognize earnings from the concrete and cement business. In that case, NARRA’s EPS will be 15.03 sen.

At rm2.20 and post consolidation price of rm4.60, NARRA’s shares would have been traded at a forward PER of 30.61 times.

Will Narra can still fetch such high valuation post exercise?

MPHBCap/Malton: Tan Sri Desmond Lim has set its eyes on two adjacent parcels of land in Ampang to build another integrated project.

He wants to buy Flamingo Hotel By The Lake and Plaza Flamingo from Tan Sri Surin’s MPHB Cap Bhd to redevelop the area into a mega project.

Sources say Lim is in talks with MPB Cap which owns the land, lake and the buildings. The parties may seal the deal for an estimated rm500 million.

It remains unclear whether Lim will purchase the property in his personal capacity or via Malton Bhd. Lim is the executive chairman of Malton with a 37.9% stake in the company as at Sept 2013.