Multi-Purpose Holding - IPO pricing not firmed up yet

kiasutrader

Publish date: Mon, 30 Jul 2012, 09:17 AM

News It was reported in The Edge Weekly over the weekend that both the management of MPHB and its bankers have yet to firm up the price for the listing of its non-gaming assets.

According to the report, MPHB was leaning towards the IPO being priced at a discount to reward its existing shareholder while the bankers thought it should be done at a premium.

MPHB will submit the draft prospectus for the NEWCO listing to SC by the end of next month.

Comments To recap, we value the non-gaming assets at RM1.44b while for the decoupling exercise, the existing shareholders are expected to be rewarded with 56 sen one-off special dividend.

In our view, there is no issue on the pricing to the existing shareholders. If the non-gaming assets are priced at discount, the reward to the existing MPHB shareholders (via the special dividend) would be lower while the offer price for the IPO would be lower as well.

Likewise, if the non-gaming assets are priced at a premium, the existing shareholders would receive a higher special dividend and the IPO would be priced at a higher price.

However, we prefer the assets to be priced at not more than their fair values as any premium valuation for its IPO could possibly attract less subscribers/interests.

Although the non-gaming assets may not be as attractive as compared to the gaming business, we still see great potential from the property assets. Hence, a fairly priced IPO will still attract investors to subscribe to the stock, in our view.

Outlook The demerger is expected to unlock the group's value while dividends are set to rise higher on the back of its 80% dividend payout policy.

Forecast No changes to our estimates.

Rating MAINTAIN OUTPERFORM

Valuation We are upgrading our target price to RM3.88/share (from RM3.72/share), based on a 10% holding company discount to its RNAV.

This is based on an updated RNAV calculation of RM4.31/share (from RM4.13/share previously) to reflect the latest WACC of 8.9% for its gaming assets from 9.3% previously.

Nonetheless, we expect a higher valuation for its gaming asset to as high as RM4.52/share upon the completion of the demerger exercise as MPHB will then become a dividend play, which will reduce its Beta.

Risks A rise in gaming tax by the government Weaker than expected ticket sales and a higher than expected prize payout ratio.

Source: Kenanga

MAGNUM (3859)

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Discussions

1 person likes this. Showing 10 of 10 comments

weiboy90

any comment about this counter? the report says that maybe MPHB will give out 56 cents special dividend.

2012-07-30 20:47

KC Loh

weiboy, guess you just have to wait and see when the prospectus for the newco comes out. Either way, if you did purchase it before the demerger was suggested, at around 2.98, you would have win big. The special dividend is just icing on the cake. I missed because of late calculation and saw the price drove up to 3.30 in matter of days!

2012-07-30 21:16

weiboy90

hmm..is it too late to go in again? cause i sold it off around rm3.40+.

2012-07-30 21:31

KC Loh

you can, if you are willing to wait for the exercise is over as well as the next couple of quarterss to see if the earning matches with what the analysts are saying.

2012-07-30 21:35

weiboy90

ok. thanks for your advice. :)

2012-07-30 21:39

KC Loh

i am assuming they are giving the newco (non-gaming) together with the gaming share if you still holding it after demerger. if its not, you should choose the gaming one! that is their jewel in the stable! Should work out the on-the-way-out Sports Toto, which will be listed in Singapore! Another Vincent Tan ploy to make money!

2012-07-30 22:02

weiboy90

hmm..so now i need to wait for the IPO so that i can purchase their gaming share?
i didn't hold any BJTOTO share. :)

2012-07-30 22:06

KC Loh

I mean should work out better than BJTOTO.

My understanding is if you are holders of the shares before the demerger, you are entitled to the newcomers share(s) . Wait for announcement. So you can buy, need not wait for the demerger exercise. Technically its not an IPO, but one share split into two categories to unlock their gaming share value.

2012-07-30 22:12

KC Loh

Newco, not newcomers! Silly auto correct :)

2012-07-30 22:14

weiboy90

ok. i guess i just wait for their announcement.
thanks for you explanation. :)

2012-07-30 22:17

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