RPT-BRIEF-Citi cuts Malaysia's TMI target price to 3.25 rgt/shr

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KUALA LUMPUR, March 25 (Reuters) - Citi cuts Malaysia's TM International Bhd TMIT.KL target price to 3.25 rgt/share from 4.50 rgt/share.

* "With the rights price now set at RM1.12 (5-for-4 rights issue), andthe stock down 15% since the plan was unveiled (-28% YTD), we see short-termshare price strength as possible. Our new (and lower) cum-rights target price ofRM3.25 implies 24.5% upside from current levels. We calculate an ex-rights SOTPof RM2.07 per share, 16% upside from the TERP of RM1.78. M&A misstep is toocrucial a risk for us, and earnings at overseas associates are at risk from macrodeterioration as well, thus we stay Hold (2H). We also raise our risk rating to High (from Medium) reflecting these concerns."

* "Post rights issue, TMIs net debt to equity falls to 0.66x, affording roomto increase leverage to fund M&A activity, a clear and present risk to any sustained re-rating in our view. Overpayment risk is a concern, with last year's Idea Cellular acquisition a case in point. While there have been no definitive pronouncements from management, it does stay open to M&A opportunities." (For related news, please click on [TMIT.KL])