Journey to Wealth
Multi-Purpose Holdings - Disposing its last non-gaming asset
News MPHB announced that its wholly-owned subsidiary, Dynamic Pearl Sdn Bhd had entered into a conditional share purchase agreement with UOB Kay-Hian Holdings Ltd for the proposed disposal of its 100% equity interest in AA Anthony Securities Sdn Bhd (AAA) for RM165mRM170m.
The disposal consideration is based on a RM15m premium to the NTA of RM150m-RM155m. The proposed disposal is expected to be completed in 4Q12.
Comments This is not unexpected as MPHB is looking to unlock more value by disposing its non-gaming assets. The only difference is that the group had announced earlier that AAA would be disposed through a Management Buyout rather than through the above sale proposal.
With the sale, MPHB is expected to become a pure gaming stock solely involved in the NFO business once its demerger exercise is completed in 1H13.
The disposal is valued at 1.1x NTA and MPHB will book in a disposal gain of c.RM44m. This should bring down its net debt and net gearing to RM551.7m and 0.17x (vs. our previous estimates of RM721.7m and 0.22x respectively) by the end of this year from RM861.5m and 0.28x respectively in FY11.
Outlook The demerger is expected to unlock the group's value while dividends are set to rise higher on the back of its higher 80% dividend payout policy from 50% in FY11.
Forecast No changes to our estimates.
Rating MAINTAIN OUTPERFORM
MPHB is our Top Pick in the gaming sector.
Valuation Our price target is maintained at RM4.31/RNAV share.
Risks A rise in gaming tax by the government
Weaker than expected ticket sales and a higher than expected prize payout ratio
Source: Kenanga
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