- Multi-Purpose Holdings Bhd has proposed to inject its
property and insurance assets into MPHB Capital for RM905.3mil. Including the
assumption of debts, MPHB Capital’s cost of acquiring MPHB’s non-gaming assets
would come up to RM982.9mil.
- In the corporate exercise, MPHB’s property assets are
valued at RM512.5mil while the insurance assets are valued at RM392.8mil.
- In our RNAV calculation for MPHB, we have assumed the value
of the property assets at RM429.2mil based on the division’s net assets. We
have also assumed a value of RM341mil for the insurance division based on the
same methodology.
- Thereafter, MPHB has proposed to undertake an offer for
sale of its shares in MPHB Capital to the existing shareholders of MPHB on the
basis of 1 MPHB Capital share for every two shares in MPHB.
- Offer price for MPHB Capital has been fixed at
RM1.00/share. We estimate the proposed capital repayment to be undertaken by
MPHB at RM0.49/share. This means that shareholders of MPHB would only have to
pay RM0.02/share to take up their entitlements in MPHB Capital. MPHB would
raise net proceeds of RM696.5mil from the proposed offer for sale exercise.
- MPHB Capital’s main income would come from the insurance
division as most of the property assets are still idle. MPHB Capital recorded a
net profit of RM50.2mil in FY11. We reckon that the offer for sale price of
RM1.00/share would value MPHB Capital at a FY11 PE of 14.2x.
- In comparison, Allianz Malaysia Bhd is currently trading
at FY13F PE of 7.7x while Manulife Holding Bhd’s FY11 PE was 10.9x.
- The entire corporate exercise is scheduled to be completed
by 1HFY13. After the demerger of the non-gaming assets, MPHB would change its
name to include the word “Magnum”.
- The proposed demerger exercise would allow MPHB to be a
purer company. It would also allow the group to return more cash to
shareholders in the form of dividends. Currently, we have a BUY on MPHB. We would
be reviewing our fair value for MPHB.
Source: AmeSecurities
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