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Tuesday, April 24, 2012

E&O slightly higher on London property purchase

KUALA LUMPUR: Shares of Eastern & Oriental Bhd (E&O) were marginally higher at midday on Tuesday amid the broader cautious market after its proposed acquisition of a central London property for £20.3mil (RM100.9mil).

At 12.30pm, it was up one sen to RM1.43.

The FBM KLCI fell 3.11 points to 1,580.69. Turnover was 727.97 million shares valued at RM608.86mil. Declining stocks beat advancers 379 to 191 while 314 stocks were unchanged.

PublicInvest Research was positive on E&O and reiterated its Outperform and RM2.20 target price.

The research house said the purchase of the London property, Princes House, was valued at £20.3mil by Jones Lang LaSalle. This, it said, suggested E&O was paying market value for the property.

"We like E&O for its well-located assets and we believe that larger developers' competitive positions have improved with their sizable landbank and ties with government-linked companies. The property industry is getting consolidated, with the larger developers commanding better margins and higher market share," it said.

PublicInvest Research said based on selling price of £1,500psf and estimated saleable area of 50,624sf post redevelopment, potential gross development value was estimated to be around £76mil or RM377mil.

By The Star

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