In an Extraordinary General Meeting (EGM) on 30th September 2021, the special resolution in respect of the proposed selective capital reduction (SCR) and repayment exercise of the company first announced in June, has been officially accepted by the minority shareholders. With this accepted resolution, its controlling shareholder, Seaport Terminal (Johore) S/B, a private vehicle of Tan Sri Syed Mokhtar Albukhary held via Indra Cita SB has received the approval to privatise MMCCorp at RM2.00 a share and subsequently will proceed with the delisting. Thus, we CEASE COVERAGE of MMCCorp.

Minorities have accepted RM2.00 privatisation offer price. In an Extraordinary General Meeting (EGM) on 30th September 2021 held via an online meeting platform, the special resolution in respect of the proposed selective capital reduction (SCR) and repayment exercise of the company pursuant to Section 116 of the Companies Act 2016 has been officially accepted by the minority shareholders. Based on the results of the poll validated by SKY Corporate Services Sdn Bhd, the independent scrutineer appointed by the company, the special resolution was voted for by 85% in number of the disinterested shareholders and 99.7519% in value to the votes attached to the ordinary shares of MMC held by the disinterested shareholders that were cast either in person or by proxy at the EGM. Further, 0.1867% of the votes attached to all MMC shares held by the disinterested shareholders of the total voting shares of MMC voted against the special resolution.

Acquisition PER of 11.6x and PBV of 0.6x. We believe the MGO price of RM2.00/share is a good exit price for the shareholders. Based on our FY21 estimate, the proposed acquisition price works out to be FY21 PER of 11.6x with PBV of 0.6x, representing premiums to average historical 1-year forward PER of 10x and PBV of 0.4x. This deal offers shareholders a chance to exit MMC given the current challenging situation, from Suez Canal’s incident ripple effect (affecting transhipment volume), higher O&M costs and lower associates’ income from Malakoff, and uncertainty in its Engineering segment which is facing tremendous challenge in securing a matching large contract (with the completion of tunnelling works from KVMRT-SSP) given the Federal government’s stretched balance sheet.

CEASING COVERAGE. With this accepted resolution, its controlling shareholder, Seaport Terminal (Johore) S/B, a private vehicle of Tan Sri Syed Mokhtar Albukhary has received the approval for privatisation of MMCCorp and subsequently will proceed with the delisting. Thus, we are ceasing coverage on MMCCorp.

Source: Kenanga Research - 1 Oct 2021