We initiate our coverage of KenolKobil with a BUY recommendation and advise investors to increase their exposure to this stock based on our 12-month price target of 15.92, a 53.08% upside from the current price levels. At a price-to-book value (PBV) of 1.39x, we hold the view that the stock’s price discovery process has consistently stagnated with the market’s ‘imperfect’ valuation paradigm often failing to price in the underlying strong earnings potential. KenolKobil, in its pursuit for value, has continually demonstrated high appetite for high yielding markets while at the same time protecting and enhancing shareholder wealth; in this breadth, we hold the view that a combination of the on-going geo-diversification strategy and focus on high yielding business lines will continue to demonstrate KenolKobil’s resilience in the face of sectoral risks locally; and a summation of the above stands to potentially trigger an upward re-rating of the stock.
Filled Under: Equity Research
