MPHB Capital to list on 25 Jun 2013. After more than half a year of delays, Multi-Purpose Holdings (MPHB) announced key dates that will eventually lead to the listing of its non-gaming assets under MPHB Capital (MPHBC) on 25 Jun 2013 and thereby, unlocking their value. The announcement puts to rest doubts that the demerger would not materialise. Maintain BUY call and MYR4.44 SOP/sh based TP. Investors who BUY MPHB now will get its property assets for free and be rewarded with >4.3% dividend yield p.a. going forward.

Key dates announced indicate that demerger is back on. Mechanics of the demerger are detailed overleaf. The entitlement date for the restricted offer for sale (ROS) is 29 May 2013 and the closing date to subscribe for the ROS is 13 Jun 2013. MPHB shareholders who do not want to subscribe for the ROS may sell their rights to the ROS from 30 May to 6 Jun 2013. Finally, MPHBC is slated to be listed and therefore, demerged from MPHB, on 25 Jun 2013. Please refer to Table 1 for a summary of key dates and events.

Still undervalued – maintain BUY call and MYR4.44 TP. Although MPHB has risen 14% since the 13th General Election on 5 May 2013, investors who BUY MPHB at its last price will still get its property assets worth MYR0.53/sh for free. This value will be unlocked once MPHBC is listed. Post-demerger, MPHB will also pay >80% of Magnum’s earnings as dividends. We estimate this will translate into attractive net DPS of >17sen or 4.3% dividend yield p.a. going forward.

MPHBC worth subscribing for. The same SOP valuation methodology returns a TP of MYR1.99/sh for MPHBC. As this is almost double the offer price of MYR1/sh, we advise investors to subscribe for the ROS. On top of that, MPHB will return MYR0.97/sh (MYR0.485/sh X 2 MPHB shares) as capital repayment. This will be a windfall for investors as they are effectively paying only MYR0.03/sh for MPHBC which we value at MYR1.99/sh.

Source: Maybank Research - 15 May 2013