Analysts upbeat on Measat privatisation

  • Business
  • Friday, 30 Jul 2010

KUALA LUMPUR: Analysts are generally positive on Measat Global Bhd’s privatisation deal and likely to advise shareholders to take up the general offer by its major shareholder.

Given the low liquidity and lack of interest in the sector, Measat has never been high on most investors’ radar screen. It consistently stayed below its book value, which as of March 31, stood at RM5.08.

“It doesn’t get any better than this. Without the privatisation, the share price would not see daylight,” said a fund manager who was involved in the original placement of Measat shares during its reverse takeover in 2002.

For investors who had picked up Measat shares that were hovering around RM1.80 to RM2 from late 2007 to February this year, they stand to make a handsome gain from the takeover offer.

However, for investors who had taken up placements of Measat shares back in 2003 at prices ranging from RM4.17 to RM4.25, the takeover does not bring them much value. Many of them had sold down their shares over the years since their entry. For the last eight years, Measat shares have been languishing.

However, with the launch of Measat 3 and Measat-3a in 2006 and 2009, Measat’s fortunes appeared to be improving.

Its annual revenue increased from RM137mil in 2006 to RM241mil in 2009. For the first quarter ended March 31, Measat posted a net profit of RM49.79mil on RM70.47mil revenue.

For the corresponding period a year ago, the company suffered a net loss of RM41.48mil on RM54.05mil revenue. Measat expects the Measat-3 and Measat-3a satellites to last for at least 17 years.

“The fact that it has four satellites translates to decent recurring earnings visibility. There is ever increasing demand for more bandwidth,” said Kenanga Research head of research Yeonzon Yeow.

“The cash offer price of RM4.20 is at a 10% premium to (Measat’s) closing price (of RM3.80 on July 27) and 2.1 times of net tangible asset of RM2.03. At an offer price of RM4.20, the price earnings ratio is 51 times using an annualised first quarter recurring net profit of RM8mil,” Yeow said, adding that the offer price was attractive.

Another fund manager who purchased Measat shares last year was more than happy to accept the RM4.20 offer. “Without the privatisation, it will take longer for Measat’s value to be realised. The company does have valuable assets which can be bundled with other businesses,” the fund manager said.

Measat’s largest shareholders are tycoon T. Ananda Krishnan, who controls about 59.56% of the company, and utility giant TELEKOM MALAYSIA BHD, which has 15.39%.

In June last year, Measat received a stock exchange caution to investors when its shares started surging amid rumours of a privatisation or merger with a sister company in Ananda’s stable of companies.

Measat is exploring options to work with partners for future satellite programmes in view that new satellite programmes were costing between US$200mil and US$300mil each.

Currently, Measat’s network spans 145 countries in the Asia-Pacific, Africa, Eastern Europe and the Middle East.

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