KUALA LUMPUR (May 12): Shares of Brahim’s Holdinghs Bhd rose 4.66% this morning after the company’s unit inked a new catering agreement with Malaysia Airlines Bhd (MAS).

At 9.46am, Brahim’s gained 4.5 sen to RM1.01 with 1.13 million shares traded.

Hong Leong IB Research upgraded Brahim’s (Fundamental: 0.35; Valuation: 0.90) to “Buy” with a target price of RM1.43 and said it viewed the catering contracts positively as it gave a higher degree of certainty in business with MAS as the caterer on nominated flights.

“We believe Brahim’s would still be able to have satisfactory net margins although it would not be as high as compared to the pricing terms in the Old Catering Agreement (OCA).

“Brahim’s Airline Catering Sdn Bhd is now free to utilise the kitchen for any potential industrial catering plans should the kitchen has additional capacity to be utilised. Hence, there could be potentially new contributions to the group under its F&B segment.

“Target price remained unchanged at RM1.43 based on FY15’s 13.5x P/E and 7x EV/EBITDA. We are upgrading the stock to Buy given more certainties to the group’s operations post-signing of the NCAs.

(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. Go to www.theedgemarkets.com for details on a company’s financial dashboard.)