News    Multi-Purpose Holdings Bhd (MPHB) announced yesterday the detailed timeline for its 1-for-2 Offer for Sale exercise of MPHB Capital Bhd (MPHBC) at RM1.00 each. The details are as follows:

  Ex-date: 27 May 2013

  Entitlement date and time: 29 May 2013 at 5:00pm

  Date for commencement of trading of the rights: 30 May 2013

  Date for despatch of abridged prospectus and subscription forms: 31 May 2013

  Date for cessation of  trading of the rights: 6 Jun 2013

  Date of allotment: 17 Jun 2013

  Listing date of MPHBC: 25 Jun 2013 

Comments     This will be the last milestone prior to the listing of MPHBC. With the clearer timeline for the listing, we believe demand for the stock of MPHB will remain strong and its share price may even surpass our price target of RM4.31/RNAV share. If that be the case, we would advise investors to continue to hold the stock at least until the entitlement date.

The strong demand is likely on the fact that the combined values of MPHB and MPHBC would be potentially worth as high as RM6.47 (refer to Page 2 for the valuation table). This includes MPHB’s re-rating story of being a pure NFO play and the revaluation of its property assets at MPHBC. This is especially so for the latter since part of it is sitting on a larger piece of land bank in the RM60b RAPID project (please refer to our report titled “BUY now for the free MPHBC shares” dated 28 Nov 2012). 

Outlook    The demerger is expected to unlock the group’s value while its dividends are set to rise higher on the back of its higher 80% dividend payout policy from 50% currently.

Forecast    No changes to our estimates for now. We will issue our new estimates for the only gamingasset entity upon the listing of MPHBC.

Rating  MAINTAIN OUTPERFORM

MPHB is our Top Pick in the gaming sector.

Valuation     Our target price is maintained at RM4.31/RNAV share.

Risks    A rise in gaming tax by the government.

Weaker than expected ticket sales and a higherthan-expected prize payout ratio.

Source: Kenanga