Brokers' take

Compiled by Andrea Soh

MOYA HOLDINGS ASIA | BUY (INITIATE COVERAGE)

TARGET PRICE: $0.17

SEPT 4 PRICE: $0.115

RHB Research, Sept 4

Moya is the only listed proxy to Indonesia's water treatment sector and has become the largest water treatment player in terms of capacity after its acquisition of Acuatico.

With its $60 million cash hoard, we believe it could continue with its acquisition spree to further consolidate Indonesia's private water treatment sector.

With rapid forecasted growth and further cost savings initiatives, we believe Moya is substantially undervalued at current levels.

Initiate coverage with "buy" and discounted cashflow-derived target price of $0.17, implying FY18F P/E of 13.8 times.

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WILMAR INTERNATIONAL | HOLD

TARGET PRICE: $3.52

SEPT 4 PRICE: $3.25

DBS Group Research, Sept 4

Through its wholly owned subsidiary KOG Investments, Wilmar has acquired 50 per cent equity stake in Aalst Chocolate, a Singapore-based manufacturer of premium chocolate.

Aalst Chocolate is understood to be the only Singapore brand that can produce both chocolate covertures and compounds, and currently exports over 98 per cent of its products, supplying to customers mainly in:

• industrial (confectionery, ice cream, biscuit and bakery); and
• food service (professionals and chefs) in more than 45 countries globally.

It currently owns five brands.

The acquisition details, as well as financials of Aalst Chocolate are scarce, though we understand that Aalst Chocolate has "one of the most cutting edge" manufacturing plants in Singapore having invested about $40 million to date.

We believe the transaction will be funded internally given the strength of Wilmar's balance sheet.

As at end-Q2 2017, Wilmar's adjusted debt to equity ratio stood at 0.31 times with free cash flow of US$282 million (S$382.5 million).

The joint venture is a natural downstream investment for Wilmar as there are likely synergies to be derived, as Wilmar's businesses in oils and specialty fats, sugar and other raw materials, can provide ingredients essential in the chocolate business.

While we believe that there is minimal impact to Wilmar's bottom line from the new joint venture, there may be further plans for investment in manufacturing plants in China, for instance in the medium term, acquisition of upstream cocoa suppliers could be a possibility, to strengthen its foothold as a chocolate manufacturer and retailer across the value chain.

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