Maybank Research: Khazanah Nasional unlikely to privatise UEM Sunrise
KUALA LUMPUR: Maybank Investment Bank Research says the privatisation of UEM Sunrise Bhd
is unlikely to happen due to the large capital expenditure (capex) required by the property developer for its projects in Nusajaya and Desaru in Johor.
“In our view, Khazanah Nasional Bhd is unlikely to privatise UEM Sunrise as there is little motivation for it to do so since the latter is Khazanah’s only listed property vehicle and privatising it would require Khazanah to find another listing platform for its property assets and there is huge capex involved in developing the greenfield land in Nusajaya and Desaru,” the brokerage said on Tuesday in its report.
Khazanah, a Government’s strategic investment fund, is a major shareholder of UEM Sunrise, with a 66.1% stake.
“Khazanah would need to fork out RM1.63bil for the remaining 33.9% stake in UEM Sunrise, assuming a 20% premium to the current share price. The money would be better used in diversifying Khazanah’s landbank outside of Nusajaya,” Maybank Research argued.
Market talk on the potential privatisation of UEM Sunrise had boosted the company’s share price, which surged 23% in a week from 87 sen on Sept 7 to RM1.07 on Monday.
Elsewhere, according to CH Williams Talhar and Wong (WTW), the transaction adviser for the Bandar Malaysia project, four preferred bidders were short-listed from the twelve RFP (request for proposals) proposals submitted for the project.
From its channel checks, Maybank Research said UEM Sunrise was one of the twelve that submitted the RFP, but it was unsure if the company was one of the four short-listed preferred bidders at this juncture.
“The attractiveness of the potential land win at the Bandar Malaysia project is dependent on the winning price.
“Based on our back-of-the-envelope calculation, a RM5bil gross development value could enhance our revalued net asset value estimate by four sen per share, assuming a 15% pre-tax margin, spanning a development period of 10 years,” it added.
Maybank Research maintained its “hold” call on UEM Sunrise, with an unchanged target price of 99 sen.
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