RHB raises Faber SOP fair value

RHB Research has raised its sum-of-parts (SOP) fair value for Faber to RM2.11 from RM2.00 after updating for Faber's net
cash position as at December 2012.

The research house said Faber posted stronger financial year 2012 earnings following writebacks and stronger contribution from property segment.

"The latest developments suggest that Faber no longer retains its majority stake in Sabah and Sarawak, the renewal of Faber's hospital support services (HSS) concession would provide further clarity to earnings moving forward," RHB Research said in a statement.

It said under the new concession agreement, the Sabah and Sarawak service areas had been awarded to two consortiums with Faber holding a 40 per cent stake in each.

"Following that, Faber had recently signed joint venture (JV) agreements with the other consortium parties to provide its non-medical healthcare support services to Sabah and Sarawak.

"While these reaffirm our expectations that Faber would no longer retain its majority stake in its East Malaysia service areas, we understand that the company is in the midst of submitting a proposal to the other consortium parties in order to secure a role as a subcontractor," said the research house.

It said in its view, Faber stands a strong chance of securing a
subcontractor role for the Sabah and Sarawak service areas given its established network of service infrastructure and good track record.-- Bernama