- According to news reports, which quoted an ASX filing, Genting Bhd will be subscribing to 47.85mil shares at S$1.20/share in Linc Energy.

- Linc’s last closing price was A$0.995/share or S$1.21/share. Linc would be moving its listing from Australia to Singapore.

- Genting Bhd’s purchase consideration in Linc would come up to S$57.4mil or RM147.9mil in total.

- Genting Bhd would own 8.4% of Linc Energy after the share subscription. Genting Bhd also has the option to buy another 10.75mil shares at the same price.

- Linc Energy is a diversified energy company with a portfolio of oil, gas and coals assets and underground coal gasification technology. The group has proprietary technology, which can convert coal into synthetic gas.

- We are neutral on Genting Bhd’s investment in Linc. We believe that Linc would be part of Genting Bhd’s investment portfolio. We do not think that this is a signal that Genting Bhd would be expanding its oil and gas division.

- Genting Bhd has invested in associate stakes in various companies in the past.

- In November 2012, Genting Bhd invested US$111.8mil in a 20% stake in TauRx Pharmaceuticals. In 2010, Genting Bhd invested RM27mil in a 20% stake in Union Bank of Colombo, Sri Lanka.

- As at end-FY12, Genting Bhd’s company level cash stood at RM3.2bil, mainly underpinned by the disposal of the Genting Sanyen Power Plant.

- We expect the group’s cash to increase further due to its warrant issue. Assuming all of the shareholders were to invest the special dividends into warrants, Genting Bhd would enjoy cash inflows of RM7.4bil from the warrant conversion in the future.

- Maintain HOLD on Genting Bhd. 

Source: AmeSecurities