After invading the territory of Putrajaya Perdana (KLSE: PPEDANA, stock-code 5117) and Loh & Loh Corp Berhad (KLSE: LOH&LOH, stock-code 7706), it appears the appetite from Middle Eastern is getting bigger and it was reported that a consortium from the oil-rich states is eyeing a strategic stake in property developer Mah Sing Group Berhad.
The shopping spree by Abu Dhabi and Kuwait investors is part of their quest to build the Middle East-Southeast Asia property value chain. Only this time their strategy might change in the sense of buying only strategic but not controlling stake as Mah Sing Group Berhad’s (KLSE: MAHSING, stock-code 8583) current boss, Datuk Seri Leong Hoy Kam, is unlikely to let go of his empire of which he owns the 40 per cent stake.
The Middle Easten investors might have learnt (their lessons) from their earlier acquisitions into Putrajaya Perdana and Loh & Loh that buying major stakes to take control and triggering mandatory general offer (MGO) might not be the best approach. They still need someone who is well-versed with the business and the operation to drive the newly acquired company. It’s better not to rock the boat and maintain the status quo of the ability of the management in generating strong cash balances, low gearing, great earnings and continue to deliver values to shareholders.
Mah Sing which is trading at 9 times and 7 times multiple of its 2008 and 2009’s financial earnings is reported to be trading at 40 percent discount to its revised net asset value of RM2.86 as estimated by Macquarie Research. The company which has declared 40 percent of its net profit will be given back to shareholders in terms of dividends for financial year 2007 has also attracted other investment bankers.
Besides a “Buy” call, all the investment banks have almost the same target price – Deutsche Bank (target price of RM3.02), CIMB (target price of RM3.00), Aseambankers (target price of RM3.00) and SJ Securities (target price of RM3.15).
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November 13th, 2007 by financetwitter
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