KUALA LUMPUR, Aug 24 — RHB Investment Bank Bhd has initiated a "buy” call on Eastern and Oriental Bhd (E&O), an upgrade from "neutral”, with a higher target price (TP) of 22 per cent to 55 sen from the previous 33 sen per share.

In a research note today, it expects billings to pick up in the coming quarters, backed by its RM269.2 million property sales in first quarter for the financial year ending March 31, 2024 (1Q FY2024).

"We raise our TP to reflect better market sentiment ahead, given the lifting of the political overhang post-state elections,” the research house said.

Moving forward, it has pared down FY2024-FY2026 earnings for E&O by about 15 per cent, with unbilled sales to rise to RM999.3 million versus RM878.9 million as at 4Q FY2024.

For 1Q, RHB Investment said Arica, the second serviced apartment project on Andaman Island, was the largest contributor, raking in RM194.8 million of sales.

"The slower billings from ongoing projects were offset by higher recognition of land sales to KWEST Sdn Bhd (currently 78.7 per cent completed versus 69.5 per cent in FY2023), as well as a better performance year-on-year from the hospitality segment,” it said.

E&O returned to the black in 1Q FY2024 with a net profit of RM32.95 million against a net loss of RM1.65 million in 1Q FY2023, due to enhanced revenue and unrealised foreign exchange gain.

Its revenue rose by 11.6 per cent to RM85.41 million from RM76.55 million a year ago, mainly attributed to Arica’s sales on Andaman Island. — Bernama