SHAREHOLDERS of MMC Corp Bhd should just accept the company’s cash offer which is deemed attractive.
UOB Kay Hian Research reasoned that the RM2/share offer price is a whopping 54% higher than last traded share price of RM1.30/share.
“Importantly, the offer is compelling as it values the company at 10 times EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation, amortisation) and a 33% discount to our revised net asset value (RNAV) of RM3/share,” justified analyst Chong Lee Len in a company update.
“This is significantly more attractive as the market has historically ascribed a 45% holding company discount to MMC.”
UOB Kay Hian Research has last rating on MMC was “hold” with a target price of RM1.20.
At the close of this morning’s trading session, MMC was trade limit up at RM1.69, up 39 sen or 30% with 1.84 million shares traded, thus valuing the company at RM1.84 bil.
Yesterday (June 3), tycoon Tan Sri Syed Mokhtar Albukhary made an offer to take MMC Corp private via a selective capital reduction and repayment (SCR) exercise.
Under the proposed deal by Seaport Terminal (Johor) Sdn Bhd (STJ), minority shareholders in MMC Corp will receive RM2.94 bil in cash or RM2/share.
STJ, the company controlled by Syed Mokhtar, has a majority 51.76% of MMC. The proposed SCR offers a substantial premium to prevailing market price of RM1.30/share.
STJ said the proposed delisting of MMC’s would provide the company “greater flexibility” to manage and develop its existing businesses. The proposed SCR is subject to shareholders’ approval at an EGM to be called later.
Meanwhile, MIDF Research maintained its “buy” call on MMC on the belief that the offer by STJ is appealing.
“The proposed exercise is a great value unlocking mechanism for a counter that is persistently trading at discounted valuation,” opined analyst Ummar Fitri.
“Key risks to our call is (i) rejection of the proposed exercise by the shareholders; (ii) price revision on the offer; and (iii) competing bid for privatisation of MMC.” – June 4, 2021
