record $1.08 high

Price :



Najeeb Jarhom

6236-2816

rhnajeeb@fraser.com.sg

Trading at a low trailing PE of just 4.2x, price to book of a shade under

1x, ROE of 24.5% and 2006 dividend yield of 3.9% with potential for

bigger payout for year ending March 31, 2007 on top of cash backing of

39 cents a share, Metro staged one of its biggest breakouts this month.

Although it squeaked through to a slightly higher new peak of $1.10 in

the last fortnight on heavy trading with this month?s volume set to be the

busiest since mid-2003, Metro has under-performed the market and its

peers in the retail/property sectors, which are trading at much higher

PEs and PBs.

The stock with a market cap of $637.08m, has been consolidating

around 80-90 cents for 6 months prior to the latest breakout. The 20-

cent rally to $1.10 is not excessive, considering that it has again

retreated to the $1 area on short term profit taking on considerably

lower volumes.

This will take care of the overbought technical conditions such as RSI,

MACD but on a longer term basis, the upturning monthly MACD has

just cut its moving average after having been on the downtrend since a

year ago when the last peak of 99 cents was seen.

The old 99 cent peak (last week?s low) should provide good support as

weekly and monthly momentum indicators suggest the stock has a long

way to go in chalking up new peaks before it runs out of speed.

While the daily momentum is overheated (being corrected by current

pullback), the weekly and monthly numbers are well below their levels

during previous rallies, implying exciting upside potential.

Taking its retail peers Robinson, Isetan and C K Tang which are trading

at around 1.4-1.5 times book value, Metro whose book value at March

31 2006 stood at $1.03, deserves to reach these ratings which mean a

potential share price of $1.40-50.

Currently the company is not well-covered by analysts given its volatile

earnings eg third quarter earnings jumped 459.7% to $32.94m after a

90.6% plunge in 2q net profits to $11.38m and 52% fall in 1q earnings

to $5.3m.

But last year the group saw earnings surging 445.5% to $148.37m from

$27.2m in fy2005. EPS had stood at 23.7 cents thus the low historical

PE of 4.2x. There is no consensus earnings forecast.

Interesting situations may also develop at Metro given its strong

presence in China?s property sector as well as the fact that major

shareholder Jopie Ong had last year raised his stake to 29.77%, a