Metro Hldgs
Price - $0.78 Target - $1.20
Metro Hldgs, long a conservative tight-lipped company, has begun to be more communicative with investors. We expect share price to respond positively, which is critical to Metro’s ambitions to build up its property assets in PRC. With property rental income forming 70% of profits, Metro, today is more a property player than a retailer and should be better valued.
It has a portfolio of retail and commercial properties in PRC’s top tier cities, strong financials and extensive retailing experience. Cash on hand of more than $173m as at Mar-08 will be further fortified by a $200m debt-raising exercise.
Our RNAV of $1.50 uses company’s Mar-08 valuation for its completed investment properties in Shanghai, Beijing, Guangzhou; properties under-construction are valued using JLL’s capital values for Beijing Grade A office space and Prime retail space. Our price target assumes a 20% discount to account for execution and market risks. Initiate with BUY. – Kim Eng Securities (30 Jun)