Stock Name: POS
Company Name: POS MALAYSIA BHD
Research House: AMMB
Pos Malaysia Bhd
(May 6, RM2.62)
Maintain buy call at RM2.73 with unchanged target price of RM3.80: Transmile Group Bhd (Transmile) said during its annual general meeting briefing that it was in the midst of restructuring its default debts by end-May. This follows a notice of Default Outstanding Amount (DOA) for outstanding debt it owes to parties, which are holding unsecured medium-term notes (MTN) issued by Transmile.
Malaysian Trustees Bhd, representing the Employees Provident Fund, OSK Group, Agrobank, AmBank Group and Meridian Asset Management Sdn Bhd - which are claiming RM106.1 million due (owed as at March 24, 2010) - issued the notice of DOA. It provided a dateline of April 14, 2010 before proceeding to serve a winding-up petition. Todate, Transmile has yet to receive further notice; however it is believed that Malaysian Trustees has already appointed receivers - with strong likelihood of liquidation.
Apart from the DOA, Transmile has another RM450 million in outstanding borrowings involving 20 banks - all borrowings are unsecured and in default for 30 months.
We feel that any progress in debt restructuring hinges on the sale of Transmile's four MD-11 aircraft  - with RM386 million valuation at book value. Management provides that a sale in the range of US$40 million (RM130.4 million) to US$50 million for each of four aircraft would be fair. Currently the wide-body planes are parked in a desert area abroad - at an annual cost of US$500,000 per annum each.
Pos Malaysia Bhd (POSM) stands to only receive RM3.3 million if Transmile is liquidated.
Transmile's market value is worth only 2.6 sen per share to POSM currently, and as of a report dated April 4, 2010, we have ceased evaluating Transmile into our fair value for POSM.
We maintain our buy call on POSM with unchanged fair value of RM3.80 per share, based on 20% discount to our discounted-cash-flow estimates (weighted-average-cost-of-capital of 9.5% and terminal price-to-earnings ratio of 14 times). At current level, POSM presents an opportunity to own a 7% yielding stock (conservative 40% payout) - a dividend giant compared to the telecommunications sector, which only yields 5% to 6%. - AmResearch, May 6
This article appeared in The Edge Financial Daily, May 7, 2010.
Company Name: POS MALAYSIA BHD
Research House: AMMB
Pos Malaysia Bhd
(May 6, RM2.62)
Maintain buy call at RM2.73 with unchanged target price of RM3.80: Transmile Group Bhd (Transmile) said during its annual general meeting briefing that it was in the midst of restructuring its default debts by end-May. This follows a notice of Default Outstanding Amount (DOA) for outstanding debt it owes to parties, which are holding unsecured medium-term notes (MTN) issued by Transmile.
Malaysian Trustees Bhd, representing the Employees Provident Fund, OSK Group, Agrobank, AmBank Group and Meridian Asset Management Sdn Bhd - which are claiming RM106.1 million due (owed as at March 24, 2010) - issued the notice of DOA. It provided a dateline of April 14, 2010 before proceeding to serve a winding-up petition. Todate, Transmile has yet to receive further notice; however it is believed that Malaysian Trustees has already appointed receivers - with strong likelihood of liquidation.
Apart from the DOA, Transmile has another RM450 million in outstanding borrowings involving 20 banks - all borrowings are unsecured and in default for 30 months.
We feel that any progress in debt restructuring hinges on the sale of Transmile's four MD-11 aircraft  - with RM386 million valuation at book value. Management provides that a sale in the range of US$40 million (RM130.4 million) to US$50 million for each of four aircraft would be fair. Currently the wide-body planes are parked in a desert area abroad - at an annual cost of US$500,000 per annum each.
Pos Malaysia Bhd (POSM) stands to only receive RM3.3 million if Transmile is liquidated.
Transmile's market value is worth only 2.6 sen per share to POSM currently, and as of a report dated April 4, 2010, we have ceased evaluating Transmile into our fair value for POSM.
We maintain our buy call on POSM with unchanged fair value of RM3.80 per share, based on 20% discount to our discounted-cash-flow estimates (weighted-average-cost-of-capital of 9.5% and terminal price-to-earnings ratio of 14 times). At current level, POSM presents an opportunity to own a 7% yielding stock (conservative 40% payout) - a dividend giant compared to the telecommunications sector, which only yields 5% to 6%. - AmResearch, May 6
This article appeared in The Edge Financial Daily, May 7, 2010.
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