Maybank Kim Eng initiated coverage of Yeo Hiap Seng with a ‘buy’ rating and a target price of $2.25, on
expectations of improving profitability and its exposure to the attractive food and beverage sector.
By 10:01 a.m., Yeo Hiap Seng shares were unchanged at $1.96, but have surged nearly 69% since the start of the year.
After restructuring, property developer Far East Organisation will emerge as a major shareholder of Yeo Hiap Seng, with a 66% stake in the company, Maybank said, adding that Yeo Hiap Seng is also planning to privatise its 61% owned unit Yeo Hiap Seng (Malaysia) Berhad, which will give it a larger share of profit from Malaysia.
Maybank said higher expected margins for Yeo Hiap Seng will also drive future profit growth, and its huge landbank, especially in Malaysia where it owns over 2 million square metres of land, is worth at least $250 million.
Yeo Hiap Seng also has an agreement with PepsiCo Inc , giving it the right of first refusal to buy the
company, who is its distributor and manufacturer in Singapore, Maybank said.
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