PLUS - ECM maintains 'hold' call on PLUS

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: ECMLIBRA

ECMLibra Investment Research has maintained its 'hold' call on PLUS Expressways Bhd with a target price of RM4.60, reflecting the takeover offer price by UEM Group-Employees Provident
Fund (EPF).

In its research note today, ECM Libra said capital repayment of RM4.60 a share would be carried out in early September 2011.

Meanwhile, OSK Research Sdn Bhd said upon the disposal of its business to UEM-EPF, PLUS would return the proceeds to shareholders via a special dividend and capital reduction.

It said in its research note that at the current share price of RM4.44, there appeared to be a minimal upside of 3.6 per cent to the RM4.60 offer price.

The research house expected PLUS earnings, which were scheduled to be released today, to be in line with expectations.

The toll operator is forecast to post a net profit of RM1.254 billion on the back of RM3.366 billion in revenue for financial year ended 2010. -- Bernama

PLUS - OSK Research maintains Neutral on tolled road concessionaires

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: OSK

KUALA LUMPUR: OSK Research remains NEUTRAL on the tolled road concessionaires sector but highlights the potential regulatory risks involved.

'We advise investors to sell PLUS (NEUTRAL, TP: RM4.60) rather than to wait for the offer proceeds (+4.8% upside). Being the only pure toll concessionaire post PLUS' privatisation, Litrak (BUY, TP: RM4.22) could benefit should investors switch stocks,' it said on Monday, Jan 31.

PLUS - ECM Libra keeps 'hold' call on PLUS

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: ECMLIBRA

ECM Libra is maintaining a "hold" on PLUS Expressways Bhd, following its announcement that it will not evaluate, consider or table Jelas Ulung Sdn Bhd's takeover offer at RM5.20 per share.

"There is uncertainty whether PLUS will be able to secure minority shareholders' approval as the question may arise whether the board has done all it can to extract the best return for its shareholders," ECMLibra said in a research note today.

The UEM-EPF offer of RM4.60 a share is lower in value when compared with Jelas Ulung's offer of RM5.20 a share.

The research house, however, reiterated that PLUS's share price never breached RM3.50 per share before July 2010, thus giving a majority of its shareholders a premium of some 31 per cent.

ECMLibra said the UEM-EPF offer had government blessings and removed concerns over strategic national assets being controlled by a little known private company.

The research house adjusted its target price to RM4.60 reflecting the only confirmed offer of RM4.60 put in by UEM-EPF.

In mid-December, Jelas Ulung came into the picture with its RM5.20 per share or RM26 billion offer, a higher offer by 13 per cent, just days before the PLUS extraordinary general meeting to vote on the proposed acquisition by UEM-EPF.

However, Jelas Ulung's failure to meet the deadline of placing a RM50 million deposit required by PLUS left only one formal offer on the table, which is the UEM-EPF offer of RM4.60 per share. -- Bernama

PLUS - UEM-EPF the sole bidder for PLUS

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: MAYBANK

PLUS Expressways Bhd
(Jan 11, RM4.45)
Recommend 'hold' (from 'buy') at RM4.69 with target price of RM4.70: MMC Corp Bhd did not throw in a new bid for PLUS as speculated. Jelas Ulung Sdn Bhd did not put in a RM50 million cash deposit, which means that it is out of the race. All eyes will now be back on UEM-EPF, which is the lone 'bidder'. The offer implies RM4.60 per PLUS share.

PLUS is now officially a 'hold'; our call has been put under review since its share price started trending close to the UEM-EPF offer price. UEM-EPF's offer is fair and close to our RM4.70-discounted cash flow-derived target price.

PLUS said that it did not receive any new offers as at 5 pm on Monday, being the final deadline for potential offers for PLUS' businesses.

Also, only UEM-EPF has remitted the RM50 million cash deposit and submitted a letter from their financiers with regards to its financial ability to undertake and complete the proposed acquisition of PLUS.

The cash deposit and unconditional written confirmation on the financial ability of the offerer to complete the acquisition of PLUS' businesses are requirements for the offer to be considered by PLUS' board of directors. As Jelas Ulung did not meet the conditions, it would imply that it is now out of the race. Business Times reported that Jelas Ulung cited a 'lack of clarity' for its failure to meet the conditions. Hence, UEM-EPF's RM23 billion offer is the only one left.

PLUS' EGM held on Dec 23, originally to vote on UEM-EPF's RM23 billion offer, was adjourned following Jelas Ulung's 11th hour RM26 billion attempt.

PLUS' directors will now have to call for another EGM to approve the sale of PLUS' businesses to UEM-EPF. The deal's completion is still contingent upon the successful restructuring of PLUS' toll concessions, expected to be completed in 4Q11. We advise shareholders to vote for the deal.

The decision on PLUS' sale to UEM-EPF will hinge on minorities holding 32.52% of PLUS, of which 10.6% are foreigners. Khazanah-UEM-EPF, which hold a combined 67.48%, cannot vote.

The number of votes required to take the deal through will have to come from minorities holding 16.27% of PLUS (50%+1 share).

The votes of two existing substantial shareholders: Kumpulan Wang Amanah Pencen (who holds 5.05% of PLUS), and Permodalan Nasional Bhd (and its related funds, 8.55%), are crucial. ' Maybank Investment Bank Research, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2011.

PLUS - OSK Research lowers PLUS TP to RM4.60

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: OSK

KUALA LUMPUR: OSK Research has revised the target price for PLUS Expressway Bhd's share price back to RM4.60 from RM5.20 after Jelas Ulung Sdn Bhd failed to make the RM50 million deposit as requested by PLUS,

PLUS had said only UEM Group Bhd and the Employees Provident Fund had remitted the cash deposit of RM50 million in their joint offer to take over for RM23 billion offer or RM4.60 per share. The deadline expired at 5pm on Monday, Jan 10.

OSK Research said on Tuesday, Jan 11 its target price is hence revised back to RM4.60 to reflect the UEM-EPF offer.

'We expect PLUS' share price to come under pressure today and could possibly fall to the RM4.36 level (-7%), which is the closing price before the Jelas offer was made.

'Our rating on PLUS is downgraded from Trading Buy to NEUTRAL,' it said.

OSK Research said the inability of Jelas Ulung to place the deposit implied that its offer is no longer valid. Apart from UEM-EPF, no other bidders deposited the RM50 million.

'While we were hopeful of the Jelas Ulung offer being pushed through, this sudden turn is not entirely surprising given the news flow following its offer. These include: (i) PLUS requiring a RM50 million deposit to be made, which is reimbursable without interest, and (ii) media articles highlighting that Bank Negara Malaysia may not approve Jelas Ulung's foreign currency credit from Bank of China to finance the acquisition,' it said.

Jelas had stated the unexpected new conditions set by PLUS had resulted in it having to make substantial adjustments to its original financial arrangements, which needs more time to sort.

Apart from financing, Jelas Ulung also said (i) there is need for more details apart from those published in the annual reports, and (ii) details on the basis for selecting the successful bidder.

PLUS - RHB Research maintains Trading Buy on PLUS

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: RHB

KUALA LUMPUR: RHB Research Institute said with the possibility of a bidding war and further news flow expected, it maintains its Trading Buy call on PLUS Expressways with an unchanged fair value of RM5.20.

The research house said on Monday, Jan 10 that the FV of RM5.20 was based on the most recent takeover offer which was made by Jelas Ulung.

'At RM5.20, PLUS is valued at a 20% premium to our NPV estimate of RM4.33 based on DCF,' it said.

RHB Research was commenting on news reports that MMC Corp may make comeback bid for PLUS as the third bidder.

The media also speculated that Jelas Ulung's RM26 billion (or RM5.20 a share) takeover bid may be blocked by Bank Negara Malaysia (BNM) on concerns that a large inflow of US$-denominated debt to fund the buyout of PLUS could destabilise the economy, for fear of a repeat of the 1997 Asian financial crisis.

'It is uncertain whether BNM would intervene, but we understand that it is within the central bank's purview to do so according to the Foreign Exchange Administration rules.

'We reiterate our view that a revised and improved offer from UEM-EPF is possible to placate minorities, despite our initial understanding that government funds which hold large minority stakes are already likely to vote in favour of UEM-EPF's RM23 billion (RM4.60/share) offer,' it said.