KL Trader Investment Research Articles

Author: kltrader   |   Latest post: Thu, 14 Nov 2019, 12:32 PM


Yong Tai Bhd - Tapping Equity Market Again

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Maintain HOLD and MYR0.37 TP for now

YTB has proposed a private placement of new shares of ≤10% of its issued shares, which we estimate will raise ≤MYR16m. While this will not aid YTB’s net debt position by much, neither will it dilute its FD EPS and NTA/shr by much as well. Our earnings estimates, HOLD call and MYR0.37 TP based on 30% discount to FD NTA/shr are unchanged for now. While investors may not view this development positively, we gather that there could be a positive near-term catalyst in the sale of Terra Square mall.

Proposes private placement of ≤10% of issued shares

Currently, YTB has 485.6m issued shares, 32.6m warrants (exercise price: MYR0.50/warrant) and 216m irredeemable convertible preference shares (ICPS). As the warrants are ‘out of the money’ and YTB plans to complete the proposed private placement in 2Q19 or before the ICPS convertibility begins on 28 Nov 2019, we estimate that YTB will issue ≤48.6m new shares, or ≤10% of its current issued shares. YTB proposes to issue the new shares to 3rd party investors (ex-management, major shareholders).

Most of the proceeds for Courtyard By Marriott

The issue price of the new placement shares has not been fixed yet but assuming they are issued at MYR0.33/shr or 8% discount to the 5-day VWAMP of YTB shares of MYR0.36/shr, YTB may raise ≤MYR16m. Proposed utilisation of proceeds is as follows:- (i) MYR8m to finance the completion of Courtyard By Marriott, (ii) MYR4.9m to fund infrastructure cost for Impression City, (iii) MYR3m to working capital; and (iv) MYR90k to defray estimated expenses.

FD NTA/shr may be diluted by only 1sen to MYR0.52

Assuming net proceeds of MYR16m, YTB will see its end-2QFY6/19 net debt of MYR241.1m trimmed by only 7%. That said, it will leave our FY20 FD EPS estimate little changed at 0.5sen (-6%) and trim our end-FY19E FD NTA/shr by only 1sen to MYR0.52. Based on an unchanged 30% discount to FD NTA/shr, our YTB TP may be trimmed by only 1sen to MYR0.36.

Source: Maybank Research - 11 Mar 2019

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