E&0 closes in on value-changing deal

By BUSINESS TIMES

GEORGE TOWN: Eastern and Oriental Bhd (E&0), one of Penang’s top property developers, could be back in the limelight again and on investors’ radar, as the company is believed to be closing in on a deal that will change its valuation landscape.

Although E&0 is up by some 39.74 per cent this year, the stock is still trading below the valuation of some of the local top research houses.

DBS Vickers values the company at RM2.90 a share, while RHB Research values it at about RM2.60 a share.

E&0, in which Sime Darby Bhd owns some 31 per cent, was last traded at RM2.18 a share.

CIMB Research, in a report released this week, indicated that there could be a major re-rating on the company if it matches expectations.

E&0 of recent has been overshadowed by smaller Penang developers such as Asas Dunia Bhd.

E&O is also said to be preparing for a public dialogue on August 24 on its detailed environmental impact assessment (DEIA) study, which it is conducting now.

The dialogue will highlight what the company has in mind for the second phase of its Seri Tanjung Pinang (STP) development.

The session also intends to showcase the future of Penang’s coastline, along with related traffic and environmental issues.

The timing of the dialogue seems to suggest that the pace has picked up for the STP project’s second phase to take its course.

To recap, in April 2012, E&O received an approval-in-principal for the reclamation work for 307.6ha of land in Tanjung Tokong on the island.

This was some 10 years after its subsidiary, Tanjung Pinang Development Sdn Bhd, received the exclusive rights from the Penang state government to reclaim and develop 396ha in Tanjung
Tokong.

Analysts expect the DEIA to be concluded in two to three months from the date of the dialogue, but the timing for a traffic impact assessment (TIA) is a little harder to predict, as there has been no precedent for a project of E&0’s scale.

CIMB Research said that E&O expects to conclude the TIA concurrently with the DEIA, of which by early next year, manual works on the waterfront project with an estimated gross development value of more than RM12 billion will take off.

– Malaysia Property News

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