By Kenanga Research IN our scenario analysis, MBF Holding Bhd is offering an upside in range of 20% and 74% depending on its future corporate developments.
For the immediate term, the share price could have reflected the recent disposal. However, in our view, the stock could be rerated, should there is any capital repayment exercises going forward.
We think its recent proposed disposal of its card business is timely given that the business operates in a highly competitive market and MBF Cards have to compete with bank-backed card issuers. As MBF Cards depends on bank borrowings as well as debts raised through the capital market, its ability to continue to raise funds could prove to be increasingly challenging, causing the business to reach a bottleneck.
Meanwhile, in the absence of deposit-taking, its cost of funds would be generally higher. This could lead to it charging substantially higher rates than its peers. As such, we believe that the decision to dispose MBF Cards, which is a 100% subsidiary of the company, provides an opportunity for it to unlock the value of its investment in MBF Cards at an attractive valuation.
The proposed disposal is expected to result in a one-off gain of RM384mil for MBF based on the audited financial statements of its financial year ended Dec 31, 2011 (FY11). This translates into an additional book value per share of RM0.67 per share. At the current price of RM1, it will trade at a 60% discount to its adjusted book value of RM2.47.
We believe the current discount above is not justifiable as the existing MBF's market capitalisation of RM570.1mil would already be lesser than the total RM623mil cash to be received from the proposed sales of MBF Cards. That means that, with the current price, investors would be getting the remaining assets of MBF for free.
These assets could be worth as much as RM0.65 per share or more as our valuation only implies a 3.2 times FY10 over FY11 price-earnings ratio. Recall that MBF still has some businesses in Papua New Guinea as well as Fiji in the automotive, agriculture, retailing, property and shipping sectors.
Together with the total cash proceeds from the disposal of RM1.09 per share, MBF's valuation should be pegged at RM1.74, adding in fair value from other businesses, which implies a 74% upside from here.
Nonetheless, we believe the current existing price offers an upside of 20% by applying a holding company and cash company discounts of 40% to its adjusted book value. The discount rate of 40% is justifiable due to uncertainty over potential new asset injections and capital repayment.
In another scenario, if there is a capital repayment exercise, the share price should react positively and offers a good trading opportunity in our view. Based on our observations, the discounts between company value and share price will narrow should the plan of capital repayment is unveiled.
looks like Tan Sri announced more than what was expected. Potential RM1 dividend in the coming 2 years! Definitely a stock worth watching for the next couple of months.... Interesting corporate development
With reference to recent publications in various local dailies on the Company’s intention to list its automotive business undertaken by its subsidiary, Boroko Motors Limited (“Boroko Motors”) in Papua New Guinea (“PNG”), MBfH wishes to announce the following:-
The Board of Directors of MBfH is optimistic about the growth potential of its businesses in PNG and has identified the automobile business conducted by the Boroko Motors group of companies as the key driver of the MBfH group of companies going forward after the proposed disposal of MBF Cards (M’sia) Sdn Bhd to AMMB Holdings Berhad. The Directors are pursuing the listing of Boroko Motors on the Port Moresby Stock Exchange which is currently at a preliminary stage.
another good news coming from this company.. after laying low for so long time, something to look ahead. Wait til around november for their Q announcement, and lets see if dividend of 40sen will be included..
coming,but need to have patience. Dividend can only be given out when disposal of card business is completed. But since it is cash transaction, it is faster. Hoping to have goodies in November announcement of quarter results... hang on..
MBf Holdings Berhad ("MBfH" or "the Company") wishes to announce that Bursa Malaysia Securities Berhad (“Bursa Securities”) had on 23 November 2012 rejected its application for a further extension of time of nine months from the date of completion of the proposed disposal by the MBfH Group of MBF Cards (M’sia) Sdn Bhd to AMMB Holdings Berhad (“Proposed Disposal”) to comply with the public shareholding spread. It is anticipated that the options available to make good the public shareholding spread are more feasible after the completion of the Proposed Disposal.
MBf Holdings Berhad ("MBfH" or "the Company") wishes to announce that Bursa Malaysia Securities Berhad (“Bursa Securities”) had on 23 November 2012 rejected its application for a further extension of time of nine months from the date of completion of the proposed disposal by the MBfH Group of MBF Cards (M’sia) Sdn Bhd to AMMB Holdings Berhad (“Proposed Disposal”) to comply with the public shareholding spread. It is anticipated that the options available to make good the public shareholding spread are more feasible after the completion of the Proposed Disposal.
As the extension of time has not been granted, Bursa Securities may:-
a. Take or impose for a breach of paragraph 8.02(1) of the LR any type of action or penalty pursuant to paragraph 16.19 of the LR; and
b. Suspend trading in the securities of MBfH pursuant to paragraph 16.02 of the LR.
MBfH’s current public shareholding is 11.29% and its request for extension of time was to allow Tan Sri Datuk Dr Ninian Mogan Lourdenadin (“Tan Sri Mogan”) to place out his shares so as to enable MBfH to comply with the public shareholding spread requirement. Tan Sri Mogan has beneficial interest over 497,412,351 MBfH shares representing 86.14% of the issued and paid up share capital of MBfH, held through Tor Private Limited, Nadin Holdings Sdn Bhd, Impact Action Sdn Bhd and Market Share Investments Limited.
As of to date, the Company has yet to formulate a rectification plan. The Company is in discussions with an Investment Bank to advise on the rectification plan and will make the appropriate disclosures once such plans are firmed up.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
helmiputrajaya
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Posted by helmiputrajaya > 2012-03-23 10:43 | Report Abuse
bos.....sempat lg ka manaik ini bass