News It was
reported that MRCB is considering to acquire a private company, Nusa Gapurna
Development Sdn Bhd (“Gapurna”) to leverage on the company’s landbanks worth up
to RM13b. Gapurna is managed by Datuk Mohamad Salim Fateh Din.
Comments We
view this news as positive to MRCB as it will be able to leverage on Gapurna’s
prime landbanks in around the Klang Valley.
Based on the news,
the price tag to acquire Gapurna was reported at the range of RM11b to RM13b,
which is mainly the total GDV of Gapurna’s landbanks located in PJ and other
Klang Valley areas (approximately 60 acres). The acquisition is said to involve
a share swap exercise between EPF and Gapurna, which will result in Gapurna
holding below 20% of MRCB.
However, the pricing
is said to be still in discussion and not finalised yet. We however believe
that MRCB and Gapurna will wrap up the possible acquisition in the next few
months or before the year-end. We also understand that Gapurna’s proposal is
not the only proposal on MRCB’s table as there could be another proposal
involving a listed company.
Based on our
back-of-the-envelope calculation, we expect EPF to dilute its shareholding in
the enlarged MRCB (including direct and indirect interest) from 42.2% to 29.1%.
At the same time, Gapurna will hold about a 22.0% interest in MRCB.
This calculation is
based on an assumed RM1.50 as the benchmark share price (based on the last GO exercise
price in MRCB by EPF) to be issued for the acquisition and Gapurna’s FY11
shareholders’ fund of RM370m.
Outlook The exercise is important to MRCB to replenish
its landbank in our view.
We understand that
MRCB will finalise the acquisition by this year-end.
Forecast No changes to our forecasts.
Rating Maintain
OUTPERFORM
We are maintaining
our OUTPERFORM recommendation.
Valuation No
changes to our SOP Target Price of RM2.71.
Risks Delays in securing more landbanks and cost
overruns at its ongoing projects due to construction delays.
Source: Kenanga
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