Monday, April 22, 2013

How do you value MISC after Petronas privatization fail?


















After Petronas announce that they fail to get the minimum 90% share of MISC Berhad on 19th April 2013, the MISC share price plunge 73sen on Monday 22nd April 2013 to close at RM4.57 from its last Friday closing of RM5.30.

So why the share price should plunge after the privatization takeover from Petronas fail? When Petronas first offering RM5.30 for the remaining MISC share, minority shareholder claim that RM5.30 price offer is too low, which not reflecting the actual value of MISC. And Petronas did revise its offer price to RM5.50 after that, still actually have some analysis said the the price is undervalue but fair.

Since the takeover fail to take place, then why should MISC price plunge so much when before that the investor feel RM5.50 takeover price is still consider undervaluing MISC?

Any way, the market force show it this way on Monday, and let's take a look on Maybank research house commented on their 22nd April report. There are one sell call from MIDF research on the same day which can be view at this link http://klse.i3investor.com/files/my/ptres/res15106.pdf

MISC - Deal Is Off


Date: 22/04/2013

Source : MAYBANK
Stock : MISC     Price Target : 5.30     |     Price Call : HOLD
Last Price : 4.57     |     Upside/Downside :  +0.73 (15.97%)


Maintain HOLD. PETRONAS’ bid to take MISC private has failed. It only secured 86.07% of shareholder acceptances as at the 5pm 19 Apr 2013 deadline, below the 90% threshold required to make this offer unconditional. As such, PETRONAS will return all MISC shares to the respective holders who had accepted the offer earlier, within 14 days from 19 Apr 2013. MISC will remain listed. Our forecasts and 12-month TP of MYR5.30, which pegs MISC to 1.1x P/BV, are under review pending an update with management.

Missed being taken private by 4%. 13.9% of MISC’s minorities did not accept the offer despite PETRONAS recently raising its takeover offer price to MYR5.50/share (3.8% above the original MYR5.30 offer). With an 86.07% (PETRONAS: 62.7%, minorities: 23.4%) acceptance level, PETRONAS was short of 4% of MISC shares to make this offer unconditional. While we reckon short-term investors would have taken this opportunity to cash out, long-term investors who had participated in a 1-for-5 rights issue in 2010 would likely have resisted the offer, which was 21% below the MYR7.00 rights issue price, holding out instead for a cyclical recovery in the shipping industry.

MISC will remain listed. We anticipate an immediate negative kneejerk reaction to share price owing to the failed takeover exercise. The worst appears to be over for the group operationally but earnings are still subject to much volatility, given prevailing uncertainties in the global environment. The chemical and petroleum divisions are likely to remain in the red in FY13 and while we expect stronger earnings in FY14 on a recovery in shipping rates, valuations are still not enticing at this stage, with the stock trading at a prospective FY14 PER of 17x, based on our and consensus estimates.

Source: Maybank Research - 22 Apr 2013

For other more optimist research house with buy call as below,

RHB raises MISC to 'buy'

 Publish date: Mon, 22 Apr 11:43   |    >> Read article in News website

 
RHB Research raised MISC Bhd to 'buy' from 'neutral' after a revised US$3 billion bid by state oil and gas company Petroliam Nasional Bhd to take the shipping firm private fell through.

By the deadline on late April 19, Petronas had only managed to lift its stake in MISC to 86.07 per cent, missing the required 90 per cent acceptance by shareholders the national oil firm needed to take MISC private.

The shareholders that did not accept the buyout offer would likely continue to hold on to MISC shares, while the anticipated sell-down will probably not be severe, RHB said in a note on Monday.

"On anticipation of a selldown, we advise investors to accumulate MISC as its prospects remain bright," RHB said.

"We see 2013 as a better year for the shipping group as earnings growth would be buoyed by its LNG, offshore, tank terminal and heavy engineering divisions, as well as narrower losses from its petroleum and chemical tanker divisions."

The research house also raised MISC's fair value to RM5.88 per share from RM5.50.

The shipping group had earlier this month said Petronas' revised US$3 billion offer to buy out all remaining stock was not fair, because it was lower than the combined valuation of its different divisions.

"We reckon that other smaller minorities may have refused to budge on the premise that the revised offer price was not attractive enough," RHB said on Monday.

Shares of MISC plunged 10 per cent on Monday against the benchmark index which rose 0.1 per cent.-- Reuters

HwangDBS Research Highlights - 22 April 2013

Author: kltrader   |   Publish date: Mon, 22 Apr 09:21

MISC; Buy
Price Target: RM6.60 (Prev RM6.00); MISC MK
Emerging stronger

Unsuccessful privatisation offer sets base value for stock. Indicates dissenting minorities look beyond the current volatility in tanker rates and believe there is greater value in the stock. BUY with RM6.60 SOPbased TP. Stock is at a multi-year low with visible catalysts in place.



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