KUALA LUMPUR (Oct 21): KAF Equities Sdn Bhd has maintained its "buy" rating of Ipmuda Bhd at RM1.55, with a higher target price of RM2.32 (from RM1.60), following the completion of the disposal of land from which part of the proceeds will be used to pare down bank borrowings.

In a note on Thursday (Oct 21), the research house said that in addition, it had also removed the previously attached discounting factor to account for the risk of construction delays for the Telekosang hydropower plant (THP).

“Note that the THP is scheduled to be completed and commissioned by the end of the year.

“In addition, we expect Ipmuda to announce entitlement dates of the proposed bonus issue, warrants and rights issue within the next one or two months following recent Bursa Malaysia approval,” it said.

KAF said while these will result in share dilution, it was unfazed as the group targets to complete three value-accretive acquisitions by the second quarter of 2022 (2Q22).

“From thereon, we only see an upside as the acquisitions should drive the group’s turnaround story.

“We expect key assets to steer the group to the black with RM18 million in profit for FY22 (the financial year ending June 30, 2022), before increasing by 74% for FY23,” it said.

At 10.10am on Thursday, Ipmuda had risen 7.74% or 12 sen to RM1.67, valuing it at RM169.43 million.