Penang Jakota announced last night that it would buy TP Concept Sdn Bhd (TP Concept) for 2100 ringgit.

We believe that Penn Jakoda's transaction will help improve returns and diversify the business portfolio.

In the medium to long term, it is believed that the transaction will bring cross-selling opportunities for Penn Jakoda and help to save costs.

Although Penn Jakoda's share price has performed strongly in recent days, its valuation is still more attractive than that of its peers. Maintain the "overweight" rating with the latest target price of HK $2.30, based on 15 times 2019 price-to-earnings ratio (previously 11 times).