CRG may command lower valuations than Bonia

PETALING JAYA: Bonia Corp Bhd, which proposed the demerger and subsequent listing of its wholly owned subsidiary CRG Incorporated Bhd on the LEAP Market of Bursa Securities, may see CRG command lower valuations than Bonia seeing as the LEAP Market is less liquid and has a lower pool of investable institutional investors that effectively translate into demand.

AmResearch said should CRG command lower valuations than Bonia, it could be value destructive to existing Bonia shareholders in the near term.

“We are neutral over the development. While we appreciate greater visibility and coherence of Bonia earnings drivers excluding CRG over the longer term, it may be offset by the potential near-term restructuring drag,” the research house said in a report yesterday.

CRG is involved in the designing, manufacturing and retailing of the Carlo Rino and CR2 branded fashion products. In FY17, CRG contributed 15.5%, 8.8% and 15% to Bonia’s revenue, pretax profit and net assets respectively. In terms of boutique count, CR contributes to 24% of Bonia’s overall boutique count.

AmResearch said the demerger and subsequent LEAP Market listing is likely to position Bonia with greater visibility and coherence of earnings drivers. It maintained its buy recommendation and fair value of 67 sen per share.

“We continue to like Bonia’s flagship brands, Braun Buffel and Bonia and its turnaround-led growth. Meanwhile, valuations are attractive for a regional luxury brand going through an upcycle in consumer spending,” said AmResearch.