HLIB Research maintains Buy on Sasbadi, ups target to RM2.42

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KUALA LUMPUR (April 17): Hong Leong IB Research has maintained its “Buy” rating on Sasbadi Holdings Bhd at RM2.09 with a higher target price of RM2.42 (from RM2.06) after Sasbadi announced that it has received a Letter of Acceptance dated from the Ministry of Education to publish, print and supply textbooks for literature component of the subject of Bahasa Malaysia for Form 5 to national schools throughout Malaysia.

In a note today, the research house said the RM2.3 million contract would commence from April 15, 2015 and end on Dec 31, 2017.

“Sasbadi will deliver the first tranche of KOMSAS BM Textbook in the first quarter of FY16 worth RM1.95m.

“Assuming a gross margin of 40%-50%, the contract is expected to contribute 2.8%-3.5% to its FY16 bottomline.

“Maintain Buy with higher target price of RM2.42 as we rolled forward our valuation based on 15x FY16 EPS,” it said.