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Tuesday, February 19, 2008

Credit Suisse cuts target price on UEM World

SHARES of UEM World Bhd fell nearly eighth per cent after it announced plans to sell four listed units to focus on its soon-to-be-listed property arm, UEM Land.

The shares, which started trading again after last week's suspension, closed the day 32 sen lower to RM3.80, in active trade.

Although analysts were positive on the deal, Credit Suisse cut its target price on the stock and three firms told investors to reject the sale offer.

The revamp enables shareholders to have direct participation in UEM Land, master developer of the Iskandar Development Region in Johor.

It also gives them the option to hold shares in UEM World's other listed subsidiaries or cash out at a 15 per cent premium to their one-month weighted average market prices.

"This is positive for UEM World shareholders, who we expect to cash out for RM1.26 per share capital repayment and participate directly in UEM Land," said Credit Suisse in a note to clients yesterday.

However, it cut its recommendation on UEM World to "neutral" from "outperform", and lowered its target to RM4.97 from RM5.88.

It also reduced its forecast of the company's earnings per share by eight per cent to nine per cent, citing an uncertain global economic outlook.

"The perception of how rapid UEM World's land value will appreciate is also toned down, so we have revised our perceived future land price from RM31 per square foot (psf) to RM23 psf to arrive at (the lower target price)," it said.

By New Straits Times

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