BlueRock Investment
TA ENTERPRISE - MGO ANALYSIS, UNFAIR & UNREASONABLE
ANALYSIS ON TA ENTERPRISE MANDATORY GENERAL OFFER
THE REASON FOR MGO (MANDATORY GENERAL OFFER)
There are a few reasons that the major shareholder of a company make a general offer to purchase the remaining shares that the major shareholder does not own. Among them is the share price of the company is undervalued and the major shareholder sees the opportunity to increase its stakes or even to take the company private at a fraction (huge discount) of the actual value of the company.
FREQUENT MANDATORY GENERAL OFFER FOR PROPERTY COUNTERS IN THE LAST 5 YEARS
Due to the unreasonable low trading price of the property counters, many of the major shareholders took the rare opportunity to increase their shareholdings. When their shareholdings reach the threshold percentage stipulated by the authorities, the major shareholders offer a price usually quite substantially higher than the last trading prices in order to attract the remaining shareholders to accept their offers. Among the numerous counts of MGO taken place within these 5 years were Hunza, OSKProp, PJDev, MLGlobal, WingTai Malaysia, PetalingTin, Pasdec and others. Now, it is the Tony Tiah’s turn to make a general offer to purchase the remaining shares of TA Enterprise. However, unlike others, Tony’s offer is only 4% above the last trading price.
ANALYSIS ON TA’s MGO
Tony Tiah and PAC have offered to purchase the remaining shares that are not owned by them at the price of RM0.66 per share. This offer price is about 44.6% of the Net Tangible Asset per share accounted in the book of RM1.48 per share. However, the NTA in the book is computed with the historical cost or purchase price of the landbanks and investment properties. Over the years, the values of the assets have appreciated tremendously especially during the period from 2009 to 2014. Therefore, a new NTA based on the current market price of the company assets must be computed to reflect the up-to-date NTA. We name the up-to-date NTA as Revised Net Asset Values (RNAV). The fairness and reasonableness of the offer price must be concluded after comparing the offer price to the RNAV.
TA does not publish a full list of properties owned by the group after 2012 Annual Report. Therefore, I have to go back to 2012 Annual Report to get the full list of properties owned by TA. This analysis is done based on its latest 2017 Annual Report together with the prior years’ ARs.
The market values of major properties owned by TA are computed and being compared to its net book values. The difference (price appreciation) between the market values and their net book values are added back to the balance sheet to compute the actual net book values (RNAV) based on the current market prices.
|
Item |
Description |
Land Size / GFA / Rooms |
Year Purchased |
Book Value (RM’000) |
Market Value (RM’000) |
Increase In Value (RM’000) |
|
1 |
TA3 & TA4, KLCC |
98,404 sq. ft. |
1991/1996/2004 |
245,373 |
549,809 |
304,436 |
|
2 |
Menara TA, KLCC |
418,502 sq.ft. |
1997 |
189,028 |
462,445 |
273,417 |
|
3 |
Swissotel Merchant Court, Singapore |
476 rms |
2009 |
558,198 |
1,285,200 |
727,002 |
|
4 |
Westin Melbourne |
262 rms |
2008 |
349,182 |
707,400 |
358,218 |
|
5 |
Trump Vancouver |
147 rms |
2017 |
299,054 |
461,580 |
162,526 |
|
6 |
FortisBC Center |
400,000 |
1995 |
187,427 |
747,320 |
559,893 |
|
7 |
Radisson Blu, Sdyney |
363 rms |
1997 |
255,857 |
871,200 |
615,343 |
|
8 |
Swissotel Khunsan, China |
387 rms |
2011 |
164,393 |
370,778 |
206,385
|
|
9 |
Damansara Avenue |
1,707,734 |
2005 |
174,574 |
683,094 |
508,520 |
|
10 |
Bukit Bintang |
129,888 |
2005 |
88,573 |
454,608 |
366,035 |
|
11 |
Movenpick Phuket |
300 rms |
2012 |
349,222 |
420,000 |
70,778 |
|
12 |
Aava Whistler, Canada |
193 rms |
2008 |
166,776 |
363,612 |
196,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
4,349,389 |
Table 1 : Increase In Property Values By Comparing Their Market Values To Their Net Book Values.
REVISED NET ASSET VALUE (RNAV) Of TA ENTERPRISE
Based on TAEnt’s 60.1748% shareholdings of TAGB and its total of 1,711,909,630 shares outstanding, the RNVA of TA Enterprise is increased by
RM4,349,389,000 x 0.601748 / 1,711,909,630 = RM1.53
RNAV = RM1.48 + RM1.53 = RM 3.01
CONCLUSION :
The offer price of RM0.66 is only about 21.9% of the Actual Net Book Value (RNAV).
The offer is UNFAIR
Fig 1: TA Enterprise Price Movement from 2012 To August 2018
TAEnt was trading for the last 5 years in the range of RM0.435 to as high as RM1.06. In addition to that, Bursa Malaysia has an unusual bad sentiment due to the unpopular political and poor governance environment. In comparison, other bourses around the world had seen their indexes risen in big quantum. In view of the price offered is way below the high of RM1.06, we conclude that
The offer is UNREASONABLE
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Discussions
1 person likes this. Showing 21 of 21 comments
Datuk Tony is ok. He has done nothing wrong.
Datuk Tony offers was triggered by the 33% threshold. He has to make this MGO as a formality as he knows that many will not let go at such a low price of 66 sen
Same thing happened last time in KAF when the Lady Boss offered Rm1.30 to take it private. Later, much later KAF Seagroat was taken private at more than Rm2.60 (double the original MGO price)
For TA or any other Companies with High Value Net Assets still at Old Book Value there is a need for SC & Bursa to make it compulsory for BOD to do a throughout REVALUATION OF ASSETS Before Privatisation is allowed.
This will be FAIR TO ALL MINORITY SHAREHOLDERS
2018-08-22 19:39
Tony will mop up as much as possible cheaply at a price no higher than 66 sen, then only years later will he up his offer unless he dies before then.
2018-08-22 20:20
TT as the major shareholder will surely want to pay the least possible for the shares not owned by him. It is free market, we as the minorities have the rights not to sell if the offer is too low. Unless he raises his offer price, I think not many will sell something worth RM3.01 at the price of RM0.66 a share.
2018-08-22 20:42
@Calvintaneng and TheContranian, your idea that TT may engage a series of two or more MGOs to achieve his plan, that is possible but the process will take at least one or few years longer.
2018-08-22 20:50
Calvin should have switched all his TA to Eksons and make 25% in the process.
2018-08-22 21:38
TA real value is so high. TT is paying peanuts to get a gem. There is no way for him to get my TA.
2018-08-23 10:40
I think something is wrong with Bursa. Why don't they require all the property counters to revalue their investment properties so that all the investors can know the real value of the shares? Why let them hide the real values? Stupid Bursa
2018-08-23 12:07
Tony could hv taken 45 years to make the first RM1bil. However, if he is successful in buying all the TA shares, he is going to make the next RM4.4bil in two months time. He is going to become 4.4 times richer. He could suddenly become top 5 richest men in Malaysia. You see how lucrative and tempting the MGO to him?
2018-08-26 18:10
Another general offer today
Daiman
Major shareholder offers to buy at RM3.00 a share. Last trading price RM2.17 per share.
It is 38.2% higher than the last trading price. The Daiman management is more fair and reasonable as compared to Tony.
2018-08-27 18:13
That is the reason I said, property counters are too cheap, selling at "lelong" price. The management knows the real worth very well. They just need to offer may be 20% to 35% of the actual price for your shares.
For TA, it is even worse. Tony offers RM660k for your bungalow that worth RM3million.
2018-08-27 18:21
If we not sell shares to TT during tis period...and we still top up at RM0.66...wat will happen to our TA share if TT success take the MGO...
2018-08-27 20:55
If TT is able to get 90% of the shares, then the MGO become compulsory. All the remaining 10% shareholders will have to sell their shares to him at the offer price. However, if TT does not achieve 90%, the shareholders have the choice whether to sell to him or not.
2018-08-28 00:43
Tony may be using 40 years to make his first RM1bil. He just needs another two months to make his next RM4bil. So you can see how effective a general offer is for Tony to multiply his wealth by 5 times based on my calculations that RNAV = RM3.01 per share.
2018-08-30 23:48
Don't simply accuse Tony lah
It is just a formality since he already hit the 33% limit that triggered MGO
It is still a very very long way for Tony to reach 90% which is then compulsory.
Tell you all what you should do.
Don't sell to Tony. Just throw away the Offer letter. If you have extra cash not needed longer term you should even follow Tony & buy TA at 66 sen from open market
About 10 years ago Great Champion Master Sifu Dr Neoh Soon Kean recommended Harrisons to us at Rm1.30 being a High Net Asset Company of NTA over Rm3.00 and with good earnings
Then to our surprise the Harrisons' Boss from Indonesia made a conditional MGO offer for Harrison at Rm1.30
But there was one Investor called "Peter" from USA kept buying and buying Harrisons shares until it crossed 10% to block compulsory unconditional MGO
Harrisons share price finally crossed Rm3.00 and then Rm4.00 to reflect its real value finally. My Johor Sifu made lots and lots of monies from Harrisons
So if you will buy now and patiently wait I think compounded gain will eventually reward all when TA ENTERPRIZE Real Value finally emerge one fine day. Estimated to be Rm1.50 to Rm2.50 at the very least.
2018-08-31 00:07
A lot of minorities have faithfully invested their savings in the company for years, some since day one the company was listed. Off course, the main contribution is from Tony. However, the minorities also have contributed to the company although to a lesser extent.
2018-08-31 00:14
@Calvintaneng, I believe Tony is serious and want to buy as much TA as possible, even much more than 50%. He has purchased so much shares and increased his holdings from 33% to 38% from the open market just in a span of 6 weeks time. 5% incraese is a lot for such a short period.
2018-08-31 00:28
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
jackfruit
You think TT want to share with shareholders. He is a crook and like to screw shareholders.
2018-08-22 18:33