Journey to Wealth
MRCB - Landbanking through Nusa Gapurna
News It was reported that MRCB is considering to acquire a private company, Nusa Gapurna Development Sdn Bhd ('Gapurna') to leverage on the company's landbanks worth up to RM13b. Gapurna is managed by Datuk Mohamad Salim Fateh Din.
Comments We view this news as positive to MRCB as it will be able to leverage on Gapurna's prime landbanks in around the Klang Valley.
Based on the news, the price tag to acquire Gapurna was reported at the range of RM11b to RM13b, which is mainly the total GDV of Gapurna's landbanks located in PJ and other Klang Valley areas (approximately 60 acres). The acquisition is said to involve a share swap exercise between EPF and Gapurna, which will result in Gapurna holding below 20% of MRCB.
However, the pricing is said to be still in discussion and not finalised yet. We however believe that MRCB and Gapurna will wrap up the possible acquisition in the next few months or before the year-end. We also understand that Gapurna's proposal is not the only proposal on MRCB's table as there could be another proposal involving a listed company.
Based on our back-of-the-envelope calculation, we expect EPF to dilute its shareholding in the enlarged MRCB (including direct and indirect interest) from 42.2% to 29.1%. At the same time, Gapurna will hold about a 22.0% interest in MRCB.
This calculation is based on an assumed RM1.50 as the benchmark share price (based on the last GO exercise price in MRCB by EPF) to be issued for the acquisition and Gapurna's FY11 shareholders' fund of RM370m.
Outlook The exercise is important to MRCB to replenish its landbank in our view.
We understand that MRCB will finalise the acquisition by this year-end.
Forecast No changes to our forecasts.
Rating Maintain OUTPERFORM
We are maintaining our OUTPERFORM recommendation.
Valuation No changes to our SOP Target Price of RM2.71.
Risks Delays in securing more landbanks and cost overruns at its ongoing projects due to construction delays.
Source: Kenanga
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