Goldman Sachs acquires 5.5% of E&O
By YEOW POOI LING
PETALING JAYA: Eastern & Oriental Bhd (E&O) found a powerful investor in US-based investment bank Goldman Sachs which disclosed to Bursa Malaysia it bought a 5.5% interest in the company on the open market.
Analysts who cover the stock said the American bank's interest was likely to be due to E&O's attractive exposure to property development as well as its construction and hospitality business.
E&O's two listed subsidiaries are its property arm E&O Property Bhd and construction arm Putrajaya Perdana Bhd.
The jewel in the group is its residential development with sea frontage on 980 acres of reclaimed land on Penang island. This is its Seri Tanjung Pinang project.
A head of research at a local brokerage said the hospitality business could also potentially be a strong contributor given E&O’s ownership of the renowned Eastern & Oriental Hotel in Penang.
E&O also aims to “build more of its own hotels and provide hotel management services.”
The group's construction business operates quite independently.
“Putrajaya Perdana does not build any of E&O’s projects,” the head of research said.
“Goldman Sach’s shareholding in E&O gives a higher profile to the company,” he added.
An analyst at another brokerage said E&O provided a fair exposure to the sector.
He estimated the shares to be trading at a price-to-earnings ratio of nine times on fiscal year ending March 31, 2007’s earnings and eight times of 2008.
E&O undertook a streamlining exercise at the end of last year. After expanding its interest in E&O Property into a subsidiary from associate-status previously, it moved on to list Putrajaya Perdana on Oct 18.
E&O chairman Datuk Azizan Abdul Rahman said in the 2006 annual report that the streamlining exercise would result in the E&O brand being leveraged and the group emerging as “a complete and competitive real estate in the marketplace.”
Goldman Sachs is a big investor in Asian stocks.
In Malaysia, it also held a substantial stake in DiGi.com Bhd.
E&O’s share price rose 2 sen to RM1.20 yesterday while units E&O Property eased 1 sen to RM1.31 and Putrajaya Perdana rose 3 sen to RM1.67.
News Source : STAR
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