SINGAPORE (Dec 27): DBS is maintaining its “hold” call on SIIC Environment with a target price of 53 cents.
This came on the back of the group announcing on Dec 22 that it plans to seek a dual listing on the Stock Exchange of Hong Kong (SEHK).
See: SIIC Environment seeks dual primary listing in Hongkong
Investors have been waiting for the group’s dual listing on SEHK for a long time and expect that it could improve trading liquidity as well as valuation, following the footsteps of Sound Global.
In a Wednesday report, analyst Patricia Yeung says, “Thus, we believe this announcement will be positive for the share price in the near term.”
However, the analyst believes that this move will not enhance the group’s valuation.
Given Hong Kong investors’ concerns about water companies’ account receivables and high debt, market leaders such as Beijing Enterprises Water and China Everbright International are trading at the low end of their trading range.
In fact, SIIC is currently trading at a premium compared to the market leaders.
“Thus, we do not expect any improvement in SIIC’s valuation,” says Yeung.
As at 12.28pm, shares in SIIC Environment are trading at 52 cents or 0.8 times FY18 book.
