Affin Hwang maintains ‘buy’ on Taliworks, raises TP to RM1.18

KUALA LUMPUR: Taliworks Corp Bhd is expected to increase its dividend payout for the final quarter of this year following the sale of its receivables due from Air Selangor for RM665mil, says Affin Hwang Capital research.

In a note, the research house said it expects the dividend payout to increase to 1.8 sen from 1.2 sen in the previous quarter due to Taliworks’ improved financial position.

It also expects Taliworks to turn from a net debt position of RM299mil in 3Q19 to a net cash position of RM355mil or 18 sen a share.

Affin Hwang cut its forecasts on 2020-21 earnings per share by 12% to reflect the lower interest income following the disposal of the receivables.

“We reduce our interest income forecasts on expectations of lower returns on cash proceeds from the disposal of receivables (2.7% p.a.) compared to the 5.25% p.a. interest rate on outstanding receivables agreed by Air Selangor,” it said.

However, the research house upgraded its target price on the stock as the disposal price of the receivables was higher than previously assumed.

“We gather that the realised value was based on a low discount rate of 3.8% (similar to yield on Cagamas bonds) compared to our assumption of 5% to derive our DCF valuation,” it said.

It maintained its buy call on the stock with a higher target price of RM1.18.

Source: TheStar