AmResearch considers RM4.60 per share fair, but others disagree
PETALING JAYA: Shareholders of PLUS Expressway Bhd have been advised to vote in favour of the RM4.60 cash offer for the assets of the company.
The advice, by AmRearch, is one of the first views by research houses on the offer to buy PLUS’ assets by the Employees Provident Fund (EPF) and Khazanah Nasional Bhd.
AmResearch analyst Hoy Ken Mak wrote in his recent report that the RM4.60 cash offer is a “fair exit price”.
“First, the offer price is only a tad (less than 3%) below our fair value of RM4.72 per PLUS share and at the high end of the consensus fair value (range) of RM3.90 to RM5.15 per share.
Moreover, PLUS’ last traded price of RM4.46 per share is the stock’s all-time closing high,” according to Hoy.
He added that PLUS’ dividend yields of 4% to 5% “are no longer that promising after the strong surge in its share price in recent months.”
Hoy also pointed out that contributions from PLUS’ overseas ventures would “not be that significant in the near term.”
“PLUS’ share of overseas revenue is less than 1% in the first half of FY2010 compared with the target of 15% by 2015, as set by management,” Hoy wrote.
To recap, EPF and Khazanah’s offer to buy the assets and liabilities of PLUS at RM23bil (and which works out to RM4.60 per PLUS share) means that shareholders (other than EPF and Khazanah) will have to vote on the deal. A simple majority of votes will suffice for the deal to go through.
This route of take-over is different from when a general offer for the shares of the target company is made. In that situation a higher threshold of shareholder support would be needed as even 10% of shareholders can prove to be a problem as the law requires the offer to secure more than 90% of shareholders’ acceptances before the balance of shares can be compulsorily acquired.
Other analysts, however, disagree. They are advising PLUS shareholders not to vote in favour of the deal, noting that the price of RM4.60 is too low.
StarBiz had reported on Saturday that at least two research houses were disappointed at the offer price, with the analysts noting that an offer price of anywhere between RM4.80 and RM5 would have been more palatable.
An earlier report by CIMB Research had also said that an offer price valued at RM4.60 per PLUS share would be negative to the research house’s target price of RM5.15 per PLUS share, which is derived using a discounted cash flow model.
The CIMB report dated Oct 11 said that PLUS was its top pick in the transport infrastructure sector due to its defensive qualities and attractive dividend yield of over 6%, with potential catalysts such as stronger-than-expected traffic volume growth and investors’ continued preference for defensive stocks.
Meanwhile ECM Libra had said in a report a day before that “while remote, we believe EPF and Khazanah could offer up to RM5.87 per PLUS share.”