KUALA LUMPUR: HwangDBS Vickers Research have recommended Multi-Purpose Holdings Bhd (MPHB) shareholders to take up the company's proposed one-for-two offer for sale of shares in MPHB Capital Bhd.

In a note today, HwangDBS Vickers said it valued MPHB Capital at RM2.16 per share, while MPHB's proposal to offer the shares to its shareholders valued it at RM1.00 each.

Thus, it has a 'buy' recommendation for MPHB and raised the target price to RM4.80 per share from RM4.20 previously. At mid-day today, MPHB was traded at RM3.72 per share on Bursa Malaysia.

MPHB Capital will house MPHB's non-gaming business under MPHB's proposed demerger exercise. It said MPHB will be a mid-sized conglomerate with estimated net profit of RM68 million annually and the insurance business will be its main earning driver.

Based on the offer for sale of RM1 per share, MPHB will be trading at an attractive 10.5 times price earning ratio, it said.
HwangDBS said there could be further upside as it has yet to factor in any contribution from property development.

"As for MPHB, the merger exercise should be viewed positively as it will turn the company into a pure gaming play with attractive dividend yields," it said.

It said although MPHB's share price has risen by 30 per cent since the announcement of the demerger exercise in May, there was still an upside as the number forecast operation business was trading at unjustified 38 per cent discount to Berjaya
Sports Toto's 13.7 times 2013 price earning forecast. -- BERNAMA