NTTD Japan is offering to buy out minority shareholders of GHLSYS (41.27% of total shares) at RM1.08/share cash, having emerged as the controlling shareholder after acquiring a 58.73% stake from various parties. The offer price translates to FY24F and FY25F PERs of 39x and 34x, respectively, based on our forecasts. We rationalise our TP to the offer price of RM1.08 (from RM0.88) and our call to ACCEPT OFFER from OUTPERFORM.

NTTD Japan (a wholly-owned subsidiary of Japan-listed NTT DATA Group Corporation) has entered into an unconditional share purchase agreement to buy c.58.73% of total issued ordinary shares from four parties namely: (i) Actis Stark (Mauritius) Limited, (ii) APIS Growth 14 Ltd, (iii) Loh Wee Hian, and (iv) Tobikiri Capital Ltd for a cash consideration of c.RM724.1m or RM1.08 per share. NTTD Japan is also offering to buy out the GHLSYS shares not already owned (c.41.27%) at RM1.08 per share and does not intend to maintain the listing status of GHLSYS. The proposed offer is expected to be completed by 3QCY24.

The offer price of RM1.08 per share translates to 39x our FY24F EPS and 34x our FY25F EPS. This implies a premium of c.90%-102% compared to global peers (e.g. Paypal, Square, Shift4 Payments, Payoneer Global Inc and Aci Worldwide), which are trading at an average PER of 20.5x FY24F EPS and 17x FY25F EPS, despite having significantly larger revenue sizes and market capitalisations than GHLSYS. We deem this as an opportunity for existing shareholders to realise the extensive value of GHLSYS.

NTTD Japan was incorporated in Japan on 1 November 2022 and is primarily engaged in consulting, provision of integrated solutions and system and software development, maintenance and support

Valuations. We rationalise our TP to the offer price of RM1.08 (from RM0.88) and our call to ACCEPT OFFER from OUTPERFORM.

Risks to our call include: NTT fails to secure a 90% stake to make the privatisation mandatory.

Source: Kenanga Research - 28 May 2024