Broker's take: RHB sees value in Amara; maintains 'buy'

RHB Research sees value in property developer and hotelier Amara Holdings even though FY2020 earnings are likely to be impacted by the Covid-19 outbreak.

On March 4, the research house maintained its "buy" recommendation on Amara, but lowered its price target to S$0.78 from S$0.88 to take into account an estimated 14 per cent dip in earnings due to lower occupancies at hotels owned by the company.

"The Covid-19 outbreak has affected tourism across the region. This includes Singapore, China and Thailand, where the group has its establishments," RHB Research analyst Leng Seng Choon said in a report. 

That said, he stood pat on his call as Amara shares were trading at a 44 per cent discount to its RNAV (revalued net asset value), presenting value for would-be investors.

On Feb 27, Amara posted a 11.9 per cent decline in fiscal 2019 net profit to S$28.2 million from S$32 million a year ago. But Mr Leng noted that bottom-line performance exceeded RHB's estimate of S$18 million.

"Whilst no breakdown was disclosed by management, the gains were for its investment properties that include retail and office assets in Singapore and Shanghai," Mr Leng said.

Revenue for FY2019 edged up 1.1 per cent to S$105.3 million from S$104.2 million the previous year.

Amara declared a S$0.02 dividend per share for the full year, which Mr Leng noted represents a "respectable" FY2019 dividend yield of 5 per cent.

As at 1.50pm on Thursday, Amara shares were trading 0.5 Singapore cent or 1.3 per cent up at S$0.40, presenting a 95 per cent upside to RHB's target price.