Raising call to BUY and TP to MYR1.56. MCIL has proposed a capital
repayment of MYR0.41/share. The MYR500m of new debt to be assumed is
manageable, and will allow MCIL to continue paying 60% of its earnings
as dividends. Post the capital repayment, we estimate that its ROE will
double to c.30%. Thus, MCIL deserves a re-rating to a higher
current-year PER of 13x (our implied target PER for Star), and
consequently a higher TP of MYR1.56 (vs. MYR1.07, on 9x PER).
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Source: Maybank Research - 17 July 2012
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