Genting  Plantations  (GP)  has  proposed  a  special  gross  DPS  of  44  sen less 25% tax (net DPS: 33 sen), and a on-renounceable restricted issue of  up  to  151.77m  warrants  at  MYR1.65/warrant,  on  a  1-for-5  basis.  The dividend  payment  is  conditional  upon  the  warrants  issuance  going through.  As  GP  shareholders would  get  to  buy  GP  at  a  7.6%  discount, this  could  result  in  some  trading  opportunity.  That  said,  GP’s fundamentals are unchanged. Maintain NEUTRAL and MYR9.26 FV.  
 
- Conditional special dividend upon completion of warrant issuance. Genting Plantations has proposed a special interim cash dividend of 44 sen less 25% tax (net DPS: 33 sen), and a non-renounceable restricted issue of up to 151.77m new warrants of GP at an issue price of MYR1.65 per  warrant,  on  a  1-for-5  basis.  The  proposed  restricted  issue  of warrants  is  intended  to  provide  the  entitled  shareholders  of  the  special dividend  with  an  option  to  reinvest  some or  all  of  the  net  dividend back into  the  company  through  the  subscription  of  warrants,  similar  to  a dividend  reinvestment  scheme.  As  such,  the  dividend  payment  is conditional upon the warrants issuance going through.

- Shareholders get to buy GP at 7.6% discount. A GP shareholder who has  five  shares  would  be  expected  to  subscribe  for  the  warrants  at MYR1.65/warrant,  but  at  the  same  time,  should  the  issuance  be completed,  he/she  would  receive  back  the  MYR1.65  in  the  form  of  a special dividend (33 sen * 5 shares). By paying MYR1.65 for the warrant, each  shareholder  would  be  getting  a  7.6%  discount  from  the  current market price.  

- No  impact  on  GP’s bottomline.  GP  would  receive  MYR250.4m  cash  from  the  warrant  issuance,  but  would  also  have  to  pay  out  the  same amount  in  the  form  of  dividends,  should  the  issuance  be  completed.  Post-warrant issuance, GP’s share base would be enlarged by 20%, although shareholders who subscribe to the warrants would not suffer an EPS dilution.   

- Maintain  NEUTRAL.  Based  on  our  SOP-based  FV  of  MYR9.26,  GP shareholders  would  be  able  to  see  a  12%  upside  from  the  discounted warrant  issue  price.  This  represents  a  trading  opportunity  for  GP shareholders.  That  said,  the company’s fundamentals are unchanged. Maintain NEUTRAL.

Source: RHB