UOB Kay Hian Research has advised MMC Corporation Bhd investors to accept the RM2/share cash offer by the company’s major shareholder Tan Sri Syed Mokhtar Al-Bukhary.
The cash offer of RM2/share is deemed compelling as it values the company at an estimated 33% discount to the research house’s revalued net asset value (RNAV) of RM3/share.
“This is significantly more attractive as the market has historically ascribed a 45% holding company discount to MMC,” observed analyst Chong Lee Len in a results review. “Consequently, we believe the RM2/share cash offer is attractive and advise investors to accept the offer.”
According to UOB Kay Hian Research, MMC’s 2Q FY2021 core net profit came in strong at RM172 mil (+122% year-on-year [yoy]; +64% quarter-on-quarter [qoq]) on the back of higher Port of Tanjung Pelepas (PTP) and North Port container volume, lower finance costs and higher associate earnings from Malakoff Corp Bhd and gas.
This brought MMC’s 1H FY2021 core net profit to RM278 mIL (+119% yoy) – ahead of expectation – aided by continuous recovery in the ports division and lower corporate expenses in 2Q FY2021.
Moving forward, UOB Kay Hian Research expects the cash offer deal to be completed by 4Q FY2021 with an extraordinary general meeting (EGM) to be called in September.
Below are consents that are required:
- Approval of the entitled shareholders for the proposed selective capital reduction (SCR) via a special resolution to be tabled at the forthcoming EGM. The proposed SCR must be approved by at least:
- A majority in number of the entitled shareholders and 75% in value to the votes attached to the MMC shares held by the entitled shareholders that are cast either in person or by proxy at the forthcoming EGM.
- The value of votes cast against the special resolution for the proposed SCR at the forthcoming EGM is not more than 10% of the votes attached to all MMC shares held by the entitled shareholders of the total voting shares of MMC.
- The approval and/or consent of the existing financiers (including bond/sukuk holders) and/or creditors of the MMC group, if required.
- The approval and/or consent of any relevant authorities or parties, if required.
At the close of today’s mid-day trading, MMC was up 2 sen or 1.1% to RM1.83 with 1.02 million shares traded, thus valuing the company at RM5.57 bil. – Aug 24, 2021
