News It was
reported in The Edge Weekly over the weekend that both the management of
MPHB and its bankers have yet to firm up the price for the listing of its
non-gaming assets.
According to the
report, MPHB was leaning towards the IPO being priced at a discount to reward
its existing shareholder while the bankers thought it should be done at a
premium.
MPHB will submit the
draft prospectus for the NEWCO listing to SC by the end of next month.
Comments To
recap, we value the non-gaming assets at RM1.44b while for the decoupling
exercise, the existing shareholders are expected to be rewarded with 56 sen
one-off special dividend.
In our view, there is
no issue on the pricing to the existing shareholders. If the non-gaming assets
are priced at discount, the reward to the existing MPHB shareholders (via the
special dividend) would be lower while the offer price for the IPO would be
lower as well.
Likewise, if the
non-gaming assets are priced at a premium, the existing shareholders would
receive a higher special dividend and the IPO would be priced at a higher
price.
However, we prefer
the assets to be priced at not more than their fair values as any premium valuation
for its IPO could possibly attract less subscribers/interests.
Although the
non-gaming assets may not be as attractive as compared to the gaming business, we
still see great potential from the property assets. Hence, a fairly priced IPO
will still attract investors to subscribe to the stock, in our view.
Outlook The
demerger is expected to unlock the group’s value while dividends are set to
rise higher on the back of its 80% dividend payout policy.
Forecast No
changes to our estimates.
Rating MAINTAIN OUTPERFORM
Valuation We
are upgrading our target price to RM3.88/share (from RM3.72/share), based on a 10%
holding company discount to its RNAV.
This is based on an
updated RNAV calculation of RM4.31/share (from RM4.13/share previously) to reflect
the latest WACC of 8.9% for its gaming assets from 9.3% previously.
Nonetheless, we
expect a higher valuation for its gaming asset to as high as RM4.52/share upon the
completion of the demerger exercise as MPHB will then become a dividend play,
which will reduce its Beta.
Risks A rise
in gaming tax by the government Weaker
than expected ticket sales and a higher than expected prize payout ratio.
Source: Kenanga
No comments:
Post a Comment