KUALA LUMPUR: KAF Equities Research is keeping its buy call on Daibochi Bhd
with a target price of RM2.90 premised on capacity expansion activities and its integrated operations with Scientex Bhd in providing flexible plastic packaging (FPP) solutions to domestic and overseas clients.
As such, the research house has forecast the group’s top-line growth to grow at a three-year earnings compounded annual growth rate (CAGR) of 16% for financial year 2021 (FY21) and FY23 forecasts bolstered by increasing production capacity.
“Valuation is pegged at a 15 times price-to-earnings ratio (PE) based on calender year 2021 forecast (CY21F) earnings per share which is in line with its long-term mean PE, ” it said. The group has allocated a total capital expenditure (capex) of RM100mil for FY20 and FY21. The capex would be used to add 21 new lines for printing, laminating and bagging which is projected to increase annual production capacity by 60%. This is supported by the growing demand for FPP domestically and in export markets.
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