Analysts say Kerjaya Prospek’s Tee brothers’ E&O takeover provide unattractive however honest, advise holders to simply accept
KUALA LUMPUR (March 29): The proposed takeover of Jap & Oriental Bhd (E&O) by the Tee brothers from Kerjaya Prospek Group Bhd is unattractive however honest, and shareholders ought to due to this fact settle for the provide, analysts stated.
Affin Hwang Capital analyst Loong Chee Wei stated in a notice at the moment that he believes the 60 sen buyback worth is cheap given the excessive implied price-earnings ratio (PER) as of March 31. 2022 (FY22) by 28 instances and a tricky outlook for E&O as a frontier. closures stay, affecting gross sales of its high-end residential initiatives.
“Nevertheless, the redemption worth is at a worth / pound [ratio]0.5 instances and worth / revalued internet asset worth (RNAV) 0.3 instances.
“Regardless of the excessive worth of E&O on the repurchase worth, its belongings, such because the Seri Tanjung Pinang Part 2A (STP2A) land, will solely be monetized in the long run via the event of its land financial institution“, he added.
He beneficial accepting the buyback following the sturdy outperformance of the share worth, with the outlook for E&O remaining troublesome.
“We imagine that their possibilities of efficiently buying greater than 50% of the capital are excessive. Main shareholders resembling Urusharta Jamaah (with a 6.6% stake) and GK Goh (5.9%) have decreased their stakes and we suspect they might settle for the takeover bid ”, a- he declared.
He saved his name “on maintain” on the title and raised his goal worth (TP) to 60 sen from 44 sen.
RHB Analysis Institute analyst Loong Kok Wen additionally suggested traders to simply accept the takeover bid.
“The provide worth of 60 sen represents a 9.7% premium over the five-day quantity weighted common worth (VWAP), a price-to-book (P / BV) worth of 0.49 instances and a 78% RNAV low cost.
“Though the provide worth will not be very engaging, we imagine this is a chance for traders to drag out because the monetization of STP2 land will take a few years to materialize, and due to this fact income will take time to enhance, ”she stated.
As well as, she stated, the upcoming land reclamation by Gamuda Bhd on the southern tip of Penang Island might pose a long-term risk to E&O given the upper land worth for STP2.
“That stated, we imagine that some institutional shareholders might not settle for the provide given their greater price of entry,” she added.
She maintained her “impartial” name on the motion and matched her TP to the 60 sen provide worth.
In the meantime, CGS-CIMB analyst Ngo Siew Ting stated the deal was impartial for E&O shareholders because the provide worth solely represents a premium of round $ 3. % of its final negotiated worth.
“We estimate the provide is as honest because it interprets to roughly 0.5 instances the P / BV FY21, which is on par with the typical of her friends,” she stated.
It saved its “pending” name on the inventory regardless of its anticipated greater earnings for FY22-23, on condition that the provide worth solely represents a premium of round 3% over its final negotiated worth and the nationwide actual property market is troublesome, particularly since E&O is positioning itself as a high-end residential developer. She additionally revised her PT to 60 sen from 44 sen.
E&O rose as a lot as 4.5 sen or 7.69% to 63 sen this morning. By 10:25 am, he had decreased some positive factors to 60.5 sen, nonetheless up two sen or 3.42%.
The inventory, among the many 30 most actively traded shares, had seen 18.23 million shares change arms.
Final Friday, Wonderful Parade Sdn Bhd – a non-public car of the Tee brothers, who management development firm Kerjaya Prospek – made a compulsory takeover bid for E&O at 60 sen per share after shopping for a ten.89% stake at Sime Darby Bhd.
The most recent share buy introduced the collective stake of Wonderful Parade and the events appearing in live performance to 42.71% from 31.82%. In consequence, Wonderful Parade is pressured to make a takeover bid.
The offerors intend to keep up E&O itemizing standing within the major market. The takeover bid is conditional on the bidders holding a stake of greater than 50% in the actual property firm.