Written by Joseph Chin 

KUALA LUMPUR: Shares of  E&O rallied in earlly trade on Sept 3 after CIMB Equities Research initiated coverage of the property developer with a Trading Buy and a target price of RM2.18.

At 9.42am, E&O rose 15 sen to RM1.45 with 6.6 million shares done.

CIMB Research said E&O was a deep-value high-beta property play. It said this former investors' darling had fallen off investors' buy list over the past few years. While E&O's execution track record leaves much to be desired, the share price has over-reacted to the bad news and ignored the company's pluses - its strong brand name recognition and excellent landbank.

The strong response to recent launches attests to the group's marketing prowess, which it will flex with the aggressive launch line-up of over RM4 billion worth of PROPERTIES [] over the next two to four years.

"We initiate coverage on E&O with a Trading Buy recommendation and a target price of RM2.18 as we tag a 30% discount to RNAV/share of RM3.11.

"E&O is not only a highly liquid deep-value stock but is also one of the highest-beta property stocks. It is now our top pick in the sector. Potential re-rating catalysts include 1) the unlocking of the hidden value of its assets, 2) strong earnings momentum, and 3) a return of investor interest in bombed-out liquid developers," it said.


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