WITH its minority shareholders having accepted the company’s RM2 privatisation offer at an extraordinary general meeting (EGM) held virtually yesterday (Sept 30), it is time for Kenanga research to cease coverage on MMC Corp Bhd.
This follows the passing of a special resolution in respect of the proposed selective capital reduction (SCR) and repayment exercise of the company pursuant to Section 116 of the Companies Act 2016 which has been officially accepted by MMC’s minority shareholders.
“With this accepted resolution, its controlling shareholder, Seaport Terminal (Johore) Sdn Bhd, a private vehicle of Tan Sri Syed Mokhtar Albukhary has received the approval for privatisation of MMC Corp and subsequently will proceed with the delisting,” commented analyst Wan Mustaqim Wan Ab Aziz in a company update.
Based on the results of the poll validated by SKY Corporate Services Sdn Bhd, the independent scrutineer appointed by the company, the special resolution was voted for by 85% in number of the disinterested shareholders and 99.7519% in value to the votes attached to the ordinary shares of MMC held by the disinterested shareholders that were cast either in person or by proxy at the EGM.
Another 0.1867% of the votes attached to all MMC shares held by the disinterested shareholders voted against the special resolution.
“We believe the MGO (mandatory general offer) price of RM2/share is a good exit price for the shareholders,” opined Kenanga Research.
Based on its FY2021 estimate, the research house said the proposed acquisition price works out to be FY2021 PER (price-to-earnings ratio) of 11.6 times with PBV (price-to-book value) of 0.6 times, hence representing premiums to average historical one-year forward PER of 10 times and PBV of 0.4 time.
“This deal offers shareholders a chance to exit MMC given the current challenging situation – from the Suez Canal’s incident ripple effect (affecting transhipment volume) to higher O&M (operation & maintenance) costs and lower associates’ income from Malakoff Bhd,” suggested Kenanga Research.
“Additionally, there is also uncertainty in its (MMC) engineering segment which is facing tremendous challenge in securing a matching large contract (with the completion of tunnelling works for the Klang Valley Mass Rapid Transit Sungai Buloh-Serdang-Putrajaya Line) given the Federal Government’s stretched balance sheet.” – Oct 1, 2021
