KUALA LUMPUR (May 13): OSK Holdings Bhd shares rose 4.88% after it obtained the green light from Securities Commission Malaysia (SC) to merge its property arm with PJ Development Holdings Bhd (PJD).

At an opening price of RM2.11, the stock rose to RM2.15 at 10.40am with 1,342,000 shares traded.

According to Bloomberg data, OSK Holdings (fundamental: 2.3; valuation: 3) was trading at a price earnings (PE) of 9.57 times with a market capitalisation of RM1.94 billion.

Meanwhile, OSK Properties saw its shares leap 4.89% to RM1.93 with 59,400 shares exchanging hands. With a market capitalisation of RM451.7 million, the stock was trading at a PE of 3.51 times.

Now, with SC’s approval, OSK Holdings will be able to merge OSK Property Holdings Bhd with PJD. The RM1.75 billion deal will see OSK Property diversifying into the property development, construction, manufacturing of buildings materials and hospitality businesses.

According to its announcement on Bursa Malaysia, the proposals include the proposed acquisition of OSK Property and PJD, business diversification, exemption bonus and special cash dividend which had also been approved under equity requirement for the public companies.

Note that OSK Properties (fundamental: 2.3; valuation: 3) had yesterday released its first quarter ended March 31, 2015 results which saw its net profit doubling to RM48.34 million from RM24.95 million the year before. Revenue was also up by 10.33% to RM284.02 million.

The increase in profit was mainly due to the disposal of its 43.7ha freehold land in Kedah for RM56 million to PR1MA Corp Malaysia last August. It also saw lower operating cost and a higher level of construction work carried out during the period under review for on-going projects.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)