MTQ

MTQ: CIMG initiates coverage with Add call and TP $1.56. Far from being wasteful, MTQ can be construed as a story of filial piety, with the son, CEO Kuah Boon Wee, returning to help his father grow the business. Since his succession, Mr Kuah and his management team have grown the group’s earnings by a CAGR of 31% for FY11-14 on the back of three acquisitions over the last three years. CIMB base-case scenario factors in a consolidation of MTQ’s acquired businesses. Forecast 14% earnings CAGR for FY14-17, with earnings accelerating after bottoming in FY15. Given the undemanding valuations, the house initiate coverage with an Add rating and target price of $1.56 (blend of 7x CY16 P/E & 1.5x CY15 P/BV). Potential catalysts include earnings strength and accretive-acquisitions.