Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: OSK



OSK Research maintains a 'neutral' recommendation for Malaysian Resources Corporation Bhd (MRCB) on the basis that the details of the proposed merger with IJM Land Bhd have yet to be finalised.

Yesterday, MRCB and IJM Land inked a Memorandum of Understanding (MoU) on the two companies' proposed merger, which will effectively give rise to the country's second largest property player.

The merged entity will have a combined revalued net asset value of about RM6.5 billion. In a research note today, OSK said the offer price was fair but not that attractive.

"Although there has been no decision on whether the proposed merger will be satisfied via a pure share swap for shares in the newly incorporated company (newco) or a combination of shares in newco and cash, the exchange offer price for each MRCB and IJM Land share has been fixed at RM2.30 and RM3.65 respectively.

"The RM2.30 offer price for MRCB offers only seven per cent and 12.2 per cent upside from the last closing price and our previous fair value respectively.

"As such, we view the offer price as somewhat fair and yet not that attractive, owing to the rather limited premium or upside," it said.

Nevertheless, it did not rule out the possibility of MRCB's share price overshooting the offer price over the short term, driven by the excitement over the proposed merger.

Both parties are expected to enter into a definitive merger agreement within three weeks from the date of the MoU. -- Bernama