Dato’ Sri Edmund Santhara, the former CEO of Masterskill, has sold approximately 17.5% of his stake in the company – which translates into 72m shares – to the recently appointed executive director, Siva Kumar M Jeyapalan at MYR0.40/share.

¨      Not a surprise. Dato’ Sri Edmund Santhara’s share disposal reaffirmed  our earlier view that he may be looking for an exit after resigning as group CEO last month. Our ground checks revealed that the former CEO may have decided to venture into non-corporate activities.  

¨      Removing share overhang? Siva Kumar, who was recently appointed as Masterskill’s Executive Director, acquired the shares at MYR0.40/share, at a significant discount of 29.2% to the previous closing price of MYR0.565. He is currently the largest shareholder with a 30.0% stake after shelling out MYR28.8m for the new shares. We are optimistic on the move as it should remove the overhang on the stock and potentially boost share price, which has been capped by the group’s succession issue.

¨      Bumper dividend still likely. As previously reported,we believe that the group would still look to unlock value from some of its assets. Assuming that all its fixed assets are disposed of at the current book value, this could potentially translate into a bumper dividend of 36.6 sen to be paid to shareholders after settling all outstanding debts.

¨      NEUTRAL. With the sell-down of Dato’ Sri Edmund Santhara’s stake in Masterskill, we believe this could potentially help the group inch closer to its transformational plans. As such, we maintain our NEUTRAL call and MYR0.61 FV, based on an existing 0.7x FY13 P/NTA, while awaiting positive news on Management’s operational strategy moving forward.            

Source: RHB