PublicInvest positive over Magnum's IRB tax settlement

KUALA LUMPUR: PublicInvest Research is positive over Magnum Bhd's agreed RM95mil settlement of a disputed tax penalty with the Inland Revenue Board.

"We view this positively as it removes the long-standing overhang issue, with the amount also significantly lower than the initial disputed amount of RM476.5m," it said in its Fridy report.

The settlement of the tax penalty is 80% lower than the initial disputed amount sought by the IRB. 

Magnum had announced in May 2017 that it was issued a notice of additional assessment in relation to dueduction of interest expenses and loan stock interest expenses incurred during the 2008-2011 assessment years.

PublicInvest has revised its headline profit for FY18/19F lower by 13% and 30% respectively owing to the one-off financial impact to Magnum over those financial years.

"However, core profit remains unchanged as this penalty is considered a non-operating and non-recurring item."

It maintained its neutral rating on the counter given its unexciting growth prospect but it expects the share price to react positively to the news and revert closer to its target price of RM2.