YONG TAI BHD

Maybank IB Research Buy

Target price: RM1.71

THE potential recognition of Yong Tai Bhd’s Impression City in Malacca as a Belt & Road project will be a major re-rating catalyst for the group, said Maybank Investment Bank (IB) Research.

The research house said the surge in Chinese tourist arrivals to Malaysia in the first four months of the year were also positive for the group as its theatre Encore Melaka is catered largely to Chinese visitors.

According to Tourism, Arts and Culture Minister Mohamaddin Ketapi, Chinese tourist arrivals to Malaysia surged 37% year-on-year to one million.

“As we opine that Encore Melaka is catered largely to Chinese visitors, we gather that this is positive for Yong Tai as this indicates a growing addressable market,” it said. The group had earlier applied to the National Development & Reform Commission of China (NDRC) to have Impression City recognised as a Belt & Road project.

“Yong Tai is cautiously optimistic that Impression City will be recognised as a Belt & Road project,” it said.

If it achieves the recognition, the Chinese state-owned enterprise that controls Orient Venture Properties Bhd can remit the outstanding progress payments for Terra Square – Retail of about RM110mil to Yong Tai.

Construction of Terra Square – Retail can then continue and Yong Tai can resume recognising revenues and profits from it, the research house said.

Maybank IB Research maintained its “buy” call and RM1.71 target price on the counter.