Stock Name: BRDB
Company Name: BANDAR RAYA DEVELOPMENTS BHD
Bandar Raya Developments Bhd (Sept 28, RM1.92)
Maintain buy at fair value of RM2.93 from RM3.14: On Monday, Bandar Raya Developments Bhd (BRDB) announced that it ceased all negotiations with Ambang Sejati SB (ASSB) in relation to the proposed disposal of BRDB's selected assets. Subsequently BRDB has opted to dispose of the selected assets by way of a tender and ASSB will be invited to participate in it.
On Sept 19, BRDB announced that it had proposed to dispose of selected investment assets namely Permas Jusco Mall, CapSquare Retail centre and its entire 100% equity interest in BR Property Holdings SB which owns the Bangsar Shopping Centre (BSC) and Menara BRDB to its major shareholder ASSB for a total consideration of around RM914 million. The announcement has resulted in negative reaction from various stakeholders expressing their concerns especially in regard to the transparency and fairness of the offer price.
Following the backlash, BRDB has decided to cease all negotiations with ASSB relating to the proposed disposal. After taking into account expressions of interest received from credible parties to acquire those assets, BRDB has opted to call for an open tender where ASSB will be invited to participate in the tender. To facilitate the potential disposal, BRDB will appoint an independent property valuer to manage the tender exercise with an announcement to be made at an appropriate time.
Given that we think the price offered by ASSB was unattractive, we view BRDB's decision to opt for the tender route positively as it would enable the group to garner better pricing for the assets via more competitive bids submitted from other interested parties. We reiterate our view that it is acceptable for BRDB to monetise its assets so long as they are disposed of at a fair and attractive pricing.
We maintain our 'trading buy' recommendation on BRDB but reverted to our previous valuation which was premised on its FY12 net tangible asset (NTA) before the disposal of the assets. Previously, we had valued BRDB based on 0.8x FY12 P/NTA post the disposal plus net cash dividend of 80 sen to arrive at our fair value (FV) of RM3.14.
As the timeframe for the tender exercise is yet to be determined, we now value BRDB at 0.8x FY12 P/NTA excluding the potential disposal. This gives rise to a new FV of RM2.93. ' OSK'' Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2011.
Company Name: BANDAR RAYA DEVELOPMENTS BHD
| Research House: OSK | Price Call: TRADING BUY | Target Price: 2.93 |
Bandar Raya Developments Bhd (Sept 28, RM1.92)
Maintain buy at fair value of RM2.93 from RM3.14: On Monday, Bandar Raya Developments Bhd (BRDB) announced that it ceased all negotiations with Ambang Sejati SB (ASSB) in relation to the proposed disposal of BRDB's selected assets. Subsequently BRDB has opted to dispose of the selected assets by way of a tender and ASSB will be invited to participate in it.
On Sept 19, BRDB announced that it had proposed to dispose of selected investment assets namely Permas Jusco Mall, CapSquare Retail centre and its entire 100% equity interest in BR Property Holdings SB which owns the Bangsar Shopping Centre (BSC) and Menara BRDB to its major shareholder ASSB for a total consideration of around RM914 million. The announcement has resulted in negative reaction from various stakeholders expressing their concerns especially in regard to the transparency and fairness of the offer price.
Following the backlash, BRDB has decided to cease all negotiations with ASSB relating to the proposed disposal. After taking into account expressions of interest received from credible parties to acquire those assets, BRDB has opted to call for an open tender where ASSB will be invited to participate in the tender. To facilitate the potential disposal, BRDB will appoint an independent property valuer to manage the tender exercise with an announcement to be made at an appropriate time.
Given that we think the price offered by ASSB was unattractive, we view BRDB's decision to opt for the tender route positively as it would enable the group to garner better pricing for the assets via more competitive bids submitted from other interested parties. We reiterate our view that it is acceptable for BRDB to monetise its assets so long as they are disposed of at a fair and attractive pricing.
We maintain our 'trading buy' recommendation on BRDB but reverted to our previous valuation which was premised on its FY12 net tangible asset (NTA) before the disposal of the assets. Previously, we had valued BRDB based on 0.8x FY12 P/NTA post the disposal plus net cash dividend of 80 sen to arrive at our fair value (FV) of RM3.14.
As the timeframe for the tender exercise is yet to be determined, we now value BRDB at 0.8x FY12 P/NTA excluding the potential disposal. This gives rise to a new FV of RM2.93. ' OSK'' Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2011.
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