- Maintain BUY on Multi-Purpose Holdings Bhd (MPHB) with an
unchanged fair value of RM3.60/share.
- We believe that the valuation disparity between MPHB and Berjaya
Sports Toto Bhd (BToto) would narrow as MPHB pays more dividends and transforms
into a purer gaming company.
- We forecast MPHB’s gross dividend yield at 6.1% in FY12F versus
BToto’s 6.8% for FYE4/13. On a per share basis, this translates into 17 sen for
FY12F against 15 sen in FY11. MPHB’s net dividend payout would be about 70% in FY12F
compared to 45% in FY11.
- MPHB and its subsidiary, Magnum Corporation Bhd are expected
to reduce their borrowings further, using operating cashflows from the NFO
division and proceeds from the disposals of property assets.
- We believe that the group’s net borrowings would decline from
RM982mil in FY11 to RM875mil in FY12F. Net gearing is estimated to ease from
31.4% in FY11 to 27.1% in FY12F.
- This would allow the group’s operating cashflows to be freed
up for higher dividend payments.
- According to news reports, MPHB is in talks to sell Plaza Magnum
at Jalan Pudu for RM54mil. After selling Plaza Magnum and Menara Multi-Purpose,
MPHB still has hotel property assets left in its stable.
- Net book value of the
“Flamingo by the Lake” Hotel at Ampang and “Flamingo by the Beach” Hotel in Penang stood
at RM88mil as at end March 2011.
- MPHB also has 4,852 acres of property landbank located in Penang,
Johor and Klang Valley, which is not jointly developed with other property
developers yet. Net book value of these landbank is about RM240mil.
- We believe that it would take time to dispose the
insurance and stockbroking divisions due to pricing issues.
- The value of the insurance assets is expected to be higher
than the stockbroking division due to the former’s operating profit of more
than RM50mil a year.
- Based on a P/BV of 1.5x on an estimated net asset of RM330mil,
the insurance division could command a net realisable value of RM495mil.
Source: AmeSecurities
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