Guthrie, Sime, Golden-Hope Shareholders Under-Offered

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Dec 08 2006
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Bursa Malaysia (KLSE) stocks’ price seems to rely and carry more weight on foreign research to the extent that stocks will only perform when it’s being mentioned by this firm. The latest being Kumpulan Guthrie Berhad (GUTHRIE : stock-code 3131), Sime Darby Berhad (SIME : stock-code 4197) and Golden Hope Plantations Berhad (GHOPE : stock-code 1953) which announced their merger recently.

When Credit Suisse mentioned that the merged entity under Synergy Drive (initial from Sime Darby) should be valued at RM 7.40, a whopping 41% potential upside from the issue price of RM 5.25, the stock price of Sime Darby sky-rocket to its’ 9-years high of RM 7.70 (above the RM 6.46 offered by Synergy Drive). Golden Hope and Kumpulan Guthrie performed with the same magnitude as well.

So, what goes wrong here? If what Credit Suisse claimed is true, does that mean Malaysia’s local research houses are incapable of evaluating such a simple fair-value for public knowledge? Credit Suisse even suggested that investors should buy Sime Darby’s shares up to RM 8.20 and Golden Hope’s up to RM 6.90. Either Credit Suisse over-project the fair-value or Synergy Drive is under-offering the fair value to the shareholders.

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