RCE Capital - Surpasses expectations

RCE Capital RM0.575: Buy
Maintain Buy. FY10 core net profit was 10% above our forecast due to lower opex and taxes in 4QFY10. We raise our FY11-12 net profit forecasts by 6% p.a., projecting a strong 13% 3-year CAGR. The stock remains significantly undervalued, trading at just 4.1x 2011 earnings.

We lift our target price to RM1.02 based on sum-of-parts 7x PER (after rolling over our valuation period to 2011) and market value for its investment (35m units) in AmFirst REIT.

by Maybank IB