INVESTMENT MERIT Historically known as a building materials company, IPMUDA is currently undergoing a transformation by reinventing itself as a renewable energy and healthcare player. After a complete change in management and directors, the company is seeking to restructure via an asset injection of a hydropower plant, solar plant, and a specialist hospital, coupled with a series of corporate exercises. Keen investors seeking exposure towards an asset ownership business model within the renewable energy space - keep a close watch on this name. NOT RATED, SoP-FV of RM1.32 (cum-all basis).

Undergoing a transformation. Historically known as a building materials company since its listing on the Main Board in 1993, IPMUDA is currently undergoing a massive transformation. Last year, the group saw a complete change in its senior management and board of directors, and is currently looking to reinvent itself as a renewable energy and healthcare group. At the helm is Beroz Nikmal Mirdin, its new executive chairman, as well as Jeffri M. Yusup as CEO, both of whom have ample experience in the renewable energy and healthcare sectors, respectively.

Asset injections. As part of its transformation, the new management is seeking to inject a list of assets into the group to kick start its reinvention. These include: (i) Telekosang hydro power plants, located in the Telekosang River in Tenom, Sabah, with a combined power output of 40MW, (ii) Jentayu solar asset, a fully operational 5.99MW solar power plant located in Pokok Sena, Kedah, with a 21-year power purchase agreement (PPA) until 2040, and (iii) Ohana Specialist Hospital, a 30-bed boutique women and children hospital specialising in paediatric and obstetrics and gynaecology care, located in Sri Rampai, Kuala Lumpur. These proposed acquisitions are to be funded via the issuance of new shares (i.e., share swap), and expected to be completed in the coming months. Combined, the new assets are expected to contribute an additional revenue of ~RM80m per year (refer to overleaf for a more in-depth discussion on these proposed acquisitions).

Corporate exercises. Prior to the proposed acquisitions, IPMUDA is also expected to execute a series of corporate exercises in part of its restructuring (subject to shareholders’ approval via EGM). This would include: (i) a proposed disposal for a leasehold property in Petaling Jaya, Selangor of which gains from disposal will be distributed as special dividends amounting to RM0.30 per share, (ii) proposed 1 for 1 bonus issue, together with 3 for 2 free detachable warrants with an exercise period of 10 years, and (iii) a proposed 1 for 1 renounceable rights issue at ~RM0.30 per share. Overall, with the special dividend and rights issue priced at the same amount, investors entering now would not need to worry about forking out additional capital in order to exercise the rights issue (refer to overleaf for a more in-depth discussion on the proposed corporate exercises).

NOT RATED; SoP-Fair Value of RM1.32. Our SoP-valuations is on a cum-all basis, which has already taken into consideration the additional shares to be issued for the asset acquisitions, but have yet to adjust for the share dilution from its bonus issue, rights issue, and warrants conversion (refer to overleaf for a more in-depth discussion on valuations).

Overall, we feel that this name could provide an investment opportunity for keen investors looking for exposure in the asset ownership business model within the renewable energy space.

Source: Kenanga Research - 8 Sept 2021