The attempt by Tenaga Nasional Bhd (TNB) to take over Integrax Bhd is far from  being  a  done  deal  after  the  latter’s  major  shareholder  Amin  Halim Rasip rejected the offer on 16 Jan. Amin, who is also the co-founder and deputy chairman of Lumut Port operator, says he will not sell his stake in the company, deeming the offer price of RM2.75 by TNB as “not fair and not reasonable  and  not  reflecting  the  value  of  Integrax.”  He  is  also recommending other shareholders reject the offer by TNB. (Source: StarBiz)

Comment:  We  are  neutral  on  this  development,  as  should  TNB  fail  to Integrax private, we believe this should  not have an operational impact to coal handling services and port facilities for TNB’s coal fired power plants. Note that TNB is currently already the single largest shareholder in Integrax with  a  22.1%  stake.  Recall  that  the  offer  price  to  take  Integrax  private implies a 20.2x 2013 PE, which we believe is reasonable vs. Westports’ 26x 2013  earnings  as  Westports  has  significantly  larger  operations,  a  more diversified customer base and regional exposure. Maintain BUY on Tenaga with unchanged TP of RM16.5.

Source: Affin Hwang Capital Research - 19 Jan 2015