- According to the Edge Financial Daily, Multi-Purpose Holdings Bhd (MPHB) is planning a major restructuring exercise that will feature the creation of a new entity to house its nongaming assets.
- Under the plan, MPHB is proposing to inject its interests in properties, hotels and financial services into a special purpose vehicle and leave the group with one asset, Magnum Corporation Bhd.
- Shares in the new entity that will house the group's non-gaming assets will be distributed to shareholders before a public listing. MPHB is considering presenting the plan to shareholders at the company's AGM today.
- MPHB's plan to dispose its non-gaming assets is not new. In the past, the group were mulling selling off its non-gaming assets to buyers. What is new is that now, MPHB plans to spin-off its non-gaming assets through a listing vehicle.
- We reckon that spinning off the non-gaming assets is a faster way of selling off the assets compared to looking for a buyer and then negotiating on the pricing.
- Back in 2005/2006, Magnum Corporation Bhd had proposed to list its property assets. However, the listing exercise did not take off as most of the assets were idle property landbank, which are non-income generating.
- What is different now is that under the special vehicle, Magnum's property assets would be listed together with MPHB's insurance and stock-broking divisions, which are profitable.
- MPHB's insurance division recorded an operating profit of RM57.4mil in FY11 while the stockbroking arm achieved an operating profit of RM16.6mil. Previously, there were reports that MPHB's stockbroking division would be bought over by the management team led by Datuk Lim Tiong Chin.
- We estimate the net book value of MPHB's insurance, stockbroking and property divisions at RM941.4mil as at end-FY11.
- We maintain a BUY on MPHB due to potentially higher dividend payouts underpinned by the group's plan to transform itself into a purer NFO company.