Quite sad not staying above 0.355 today. If cannot break for next transaction, then high chance of reversing direction. Please watch closely next week.
High valuation for M&A Securities TheEdge Mon, Oct 11, 2021 01:30pm - 6 hours ago
Insas Bhd’s plan for M&A Securities Sdn Bhd to assume the listing status of SYF Resources Bhd in a RM222 million reverse takeover exercise deal has received muted response from investors, judging from the two companies’ share price performance.
The deal values M&A Securities at a price-earnings ratio of 11.8 times and price-to-book (P/B) ratio of 1.2 times, based on its net earnings and net asset value for the financial year ended June 30, 2021 (FY2021).
The valuation of M&A Securities is even higher than that of the local banks, whose average P/B ratio is only 0.9 times. Currently, smaller banks such as Affin Bank Bhd and Malaysia Building Society Bhd are trading at only 0.4 and 0.5 times respectively.
Also, the P/B ratios of other stockbroking firms such as Kenanga Investment Bank Bhd and Apex Equity Holdings Bhd come in lower at 0.9 and 0.6 times respectively.
Thus, the deal to inject M&A into SYF Resources — which will subsequently lead to a name change to M&A Capital — may look expensive.
Upon completion of the backdoor listing, Insas will hold 75.9% of SYF Resources as the disposal sum will be satisfied via the issuance of new shares in SYF Resources.
From the financial performance perspective, while M&A Securities saw a strong jump in its net profit — from RM9.22 million in FY2020 to RM18.81 million in FY2021 — using a three- or five-year average could have been a better benchmark. Note that in FY2019, its net profit was a mere RM6.62 million.
The exceptionally robust earnings were primarily boosted by active share trading among retail investors, driven by loan moratoriums as well as strong market interest in healthcare, technology and penny stocks. At the same time, M&A Securities also acted as principal advisers and successfully listed six companies on the ACE Market in FY21.
As retail participation eases, stockbroking firms may see more normalised earnings, and this will be reflected in the upcoming results.
Bought in at 33sen. So that means cost will be 15sen. Plus additional 14sen new shares means total cost will be 14.6sen. Seems okay. Of course if price drops to 32sen all the better!
U all must understand huge dilution of NAV to only 15 sen after issuance of massive more than 1 billion shares to insas mah!
Basically u get about par value investment in M&A after dividend & capital repayment loh!
As investment prospect at PE 12x is reasonable despite comparison with affin & kenanga loh!
U need to bear in mind there is a corporate exercice with RI & special issue to staffs at 14 sen mah!
Also u need to take note the current fd rates is only around 2% pa whereas m&a earnings yield is 8.3% pa and most likely the dividend yield will exceed 2% pa mah!
With growth opportunity for m&a....this is a good speculative play...with high chance of succeed loh!
They will goreng the share way above the RI & share issue price loh! There will probably be several times to stir interest. Could be a favourable article/write-up before SC approval, immediately after SC approval, in the run up to the EGM, immediately after EGM approval, before rights ex-date etc. etc.
Posted by TheContrarian > Oct 8, 2021 10:37 PM | Report Abuse
I think downside is limited but there's greater upside. Can't go down much but at the right time it can rocket up.
Posted by mhanaS > Oct 12, 2021 4:05 AM | Report Abuse
Bought in at 33sen. So that means cost will be 15sen. Plus additional 14sen new shares means total cost will be 14.6sen. Seems okay. Of course if price drops to 32sen all the better!
Posted by TheMerchant > Oct 11, 2021 7:53 PM | Report Abuse
High valuation for M&A Securities TheEdge Mon, Oct 11, 2021 01:30pm - 6 hours ago
Insas Bhd’s plan for M&A Securities Sdn Bhd to assume the listing status of SYF Resources Bhd in a RM222 million reverse takeover exercise deal has received muted response from investors, judging from the two companies’ share price performance.
The deal values M&A Securities at a price-earnings ratio of 11.8 times and price-to-book (P/B) ratio of 1.2 times, based on its net earnings and net asset value for the financial year ended June 30, 2021 (FY2021).
The valuation of M&A Securities is even higher than that of the local banks, whose average P/B ratio is only 0.9 times. Currently, smaller banks such as Affin Bank Bhd and Malaysia Building Society Bhd are trading at only 0.4 and 0.5 times respectively.
Also, the P/B ratios of other stockbroking firms such as Kenanga Investment Bank Bhd and Apex Equity Holdings Bhd come in lower at 0.9 and 0.6 times respectively.
Thus, the deal to inject M&A into SYF Resources — which will subsequently lead to a name change to M&A Capital — may look expensive.
Upon completion of the backdoor listing, Insas will hold 75.9% of SYF Resources as the disposal sum will be satisfied via the issuance of new shares in SYF Resources.
From the financial performance perspective, while M&A Securities saw a strong jump in its net profit — from RM9.22 million in FY2020 to RM18.81 million in FY2021 — using a three- or five-year average could have been a better benchmark. Note that in FY2019, its net profit was a mere RM6.62 million.
The exceptionally robust earnings were primarily boosted by active share trading among retail investors, driven by loan moratoriums as well as strong market interest in healthcare, technology and penny stocks. At the same time, M&A Securities also acted as principal advisers and successfully listed six companies on the ACE Market in FY21.
As retail participation eases, stockbroking firms may see more normalised earnings, and this will be reflected in the upcoming results.
The dividend and capital repayment proposal is 18sen. The new share issue is 14sen. Add the two together and you wonder why would anyone sell at 31½sen or below? Add in the rights issue as well as potential upside that the new business brings, one could sum up that collecting the counter now seems like a no-brainer.
After the special dividend and capital repayment, total 18 sen .... market price must be higher than 14sen, otherwise people can buy from the market rather than subscribe the RI !!
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....
Winner_Master
116 posts
Posted by Winner_Master > 2021-10-08 21:40 | Report Abuse
Quite sad not staying above 0.355 today. If cannot break for next transaction, then high chance of reversing direction. Please watch closely next week.