HanKore

HanKore: Share price has corrected by 25% since details of the RTO by CEI was announced 2 June. Market viewed the deal negatively on the back of a higher-than-expected transaction price, causing a larger-than-expected EPS dilution. In effect, HanKore’s FY15e P/E is inflated to 23.4x, exceeding closest peer SIIC< which is priced at 22.1x FY15E. That said, Maybank-KE feels that the benefits that CEI could bring, such as stronger project sourcing ability, lower borrowing costs and stronger balance sheet is still underappreciated by the market. Maybank KE expects HanKore to embark on an acquisition drive to position itself as a key player in the WWT industry, and expects annual acquisition of 1m ton/day WWT capacity for FY15e and FY16e vs orinal amoung of 500k ton/day. Maybank KE has a Buy call on HanKore with reduced TP of $1.23 from $1.70