Stock Name: MPHB
Company Name: MULTI-PURPOSE HOLDINGS BHD
Multi-Purpose Holdings Bhd
Maintain buy at RM2.21 with revised target price of RM3.64 (from RM3.60): Cash proceeds from Multi-Purpose Holdings' (MPHB) sale of Menara Multi-Purpose (MMP) for RM375 million will be utilised to pare debt. We trim our post-2011 earnings estimates by 2% on rental income foregone but tweak our target price (TP) higher by 1% to RM3.64 on higher-than-expected consideration. This development shows that management is committed to disposing of non-core assets and distilling MPHB into a purer gaming concern. Maintain 'buy'.
MPHB entered into a sale and purchase agreement (SPA) with the Malaysian Chinese Association to dispose of Menara Multi-Purpose (MMP) with 414 car park bays for RM375 million cash. Based on MMP's net book value (NBV) as at Dec 31, 2010 of RM175.4 million, MPHB will record a RM199.6 million gain on disposal. On a recurring basis, we expect it to forego RM7 million in net profit (RM25.2 million in rental income, 50% Ebitda margin, 20% tax) or 2% to our 2012 earnings estimate.
RM37.5 million or 10% had been received as deposit. RM87.5 million will be received within 30 days from the date of the SPA while the remaining RM250 million will be received within 90 days from the date of the SPA. The consideration will be utilised to pare debt. We had hoped that a third of the consideration will be returned to shareholders as special dividends. With this disposal, our estimated net gearing as at end-2011 will fall from 67% to 51%.
The disposal is expected to be completed by end-2011. We trim our post-2011 earnings estimates by 2% on the rental income foregone but tweak our sum-of-parts or SOP/share valuation higher by 1% to RM4.04 to account for the consideration that was RM80.9 million above expectations. On an unchanged 10% discount, we tweak our TP higher by 1% to RM3.64.
We are highly encouraged by this development as it proves that management is committed to disposing of its non-core assets and distilling itself into a purer gaming concern. We like MPHB for its cheap valuations at eight times one-year forward PER. Disposal of non-core assets will re-rate this stock, albeit, gradually via special dividends and stronger recurring dividends. ' Maybank IB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2011.
Company Name: MULTI-PURPOSE HOLDINGS BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.64 |
Multi-Purpose Holdings Bhd
Maintain buy at RM2.21 with revised target price of RM3.64 (from RM3.60): Cash proceeds from Multi-Purpose Holdings' (MPHB) sale of Menara Multi-Purpose (MMP) for RM375 million will be utilised to pare debt. We trim our post-2011 earnings estimates by 2% on rental income foregone but tweak our target price (TP) higher by 1% to RM3.64 on higher-than-expected consideration. This development shows that management is committed to disposing of non-core assets and distilling MPHB into a purer gaming concern. Maintain 'buy'.
MPHB entered into a sale and purchase agreement (SPA) with the Malaysian Chinese Association to dispose of Menara Multi-Purpose (MMP) with 414 car park bays for RM375 million cash. Based on MMP's net book value (NBV) as at Dec 31, 2010 of RM175.4 million, MPHB will record a RM199.6 million gain on disposal. On a recurring basis, we expect it to forego RM7 million in net profit (RM25.2 million in rental income, 50% Ebitda margin, 20% tax) or 2% to our 2012 earnings estimate.
RM37.5 million or 10% had been received as deposit. RM87.5 million will be received within 30 days from the date of the SPA while the remaining RM250 million will be received within 90 days from the date of the SPA. The consideration will be utilised to pare debt. We had hoped that a third of the consideration will be returned to shareholders as special dividends. With this disposal, our estimated net gearing as at end-2011 will fall from 67% to 51%.
The disposal is expected to be completed by end-2011. We trim our post-2011 earnings estimates by 2% on the rental income foregone but tweak our sum-of-parts or SOP/share valuation higher by 1% to RM4.04 to account for the consideration that was RM80.9 million above expectations. On an unchanged 10% discount, we tweak our TP higher by 1% to RM3.64.
We are highly encouraged by this development as it proves that management is committed to disposing of its non-core assets and distilling itself into a purer gaming concern. We like MPHB for its cheap valuations at eight times one-year forward PER. Disposal of non-core assets will re-rate this stock, albeit, gradually via special dividends and stronger recurring dividends. ' Maybank IB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2011.
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