• UMW said on Wednesday that PNB Equity Resource Corp Sdn Bhd (PERC) had requested for an extension to the offer period for UMW's proposed acquisition of the 10% stake in Perodua to April 30 from March 28. UMW consented to this.

• Recall that UMW proposed to acquire 10% in Perodua held by PERC for RM29.80/share or RM417.5mil. It will pay RM117.5mil in cash and another RM300mil from the issuance of 49.3mil new UMW shares.

• While no reason was stated for the extension, the two transactions that comprise the first stage of UMW's plan to raise its ownership of Perodua (from 38% now to 70.6%) are now realigned in the timing for their acceptance date.

• Both Med-Bumikar Mara (which holds 50.07% of MBM Resources) and PERC have up to April 30 to decide on the respective offers from UMW.

• Note that the two proposals are not conditional upon each other.

• We reiterate that the valuation for Perodua is on the low side. UMW is valuing Perodua at a PE multiple of 9x after factoring in the rate of TIV growth going forward, the rise of alternative modes of transportation and the competitive pressure on the industry.

• We retain our SOP-based FV of RM6.22/share for UMW.

Source: AmInvest Research - 29 Mar 2018