PETALING JAYA: The revised takeover price of RM6.30 per share offered by Selangor Properties Bhd’s controlling shareholder is considered attractive, although it remains below the company’s book value per share, according to analysts.
The Wen family, that owns 68.23% of Selangor Properties via its investment vehicle Kayin Holdings Sdn Bhd, raised its proposed selective capital reduction (SCR) and repayment offer price by 30 sen for the second time yesterday.
The plan to privatise the property company was announced on Oct 25, 2018 at RM5.70 per share. Less than two months later on Dec 17, the Wen family upped its offer price to RM6.
KAF-Seagroatt & Campbell Securities analyst Izzul Hakim Abdul Molob said that Selangor Properties’ book value per share stood at about RM7.17, higher than the price offered by the Wen family.
“The offeror’s takeover price shows an implied discount of about 10% if compared against the company’s book value per share. However, considering the current property market condition, an offer price of RM6.30 is still considered attractive,” he told StarBiz.
Valuation-wise, Izzul Hakim said that Selangor Properties was trading at a price-to-book value of 0.8 times, almost similar to the industry level.
“The company is also in a net cash position, with quality landbank in its portfolio,” he said.
The Selangor Properties counter rose 32 sen or 5.57% to RM6.07 yesterday, following news of the revised takeover price. Yesterday’s closing price stood at a discount of about 4% compared to the Wen family’s latest offer price.
A property analyst from a local brokerage described the offer price of RM6.30 per share as “fair”, given the weak domestic property market condition.
“Shareholders could use this opportunity to exit the company. Most of Selangor Properties’ land is in Damansara Heights, known for its high-end real estate. Considering the current property market condition, development in these parcels of land is not doable.
“Selangor Properties’ potential to develop its landbank may be limited at the moment. Hence, there is little upside for the share price, at least until the property market recovers.
“ So, it is better if the shareholders take profit now by agreeing to the takeover price,” she said.
In a Bursa Malaysia filing yesterday, Selangor Properties said the board, except for the interested directors, had deliberated on the revised proposal letter. The proposed SCR would be tabled to shareholders.
“Consequent to the revision of the SCR offer price, the entitled shareholders will receive a total capital repayment of RM687.76mil, which represents a cash repayment of RM6.30 for each share held by the entitled shareholders on the entitlement date,” it said.
The company also said the issued share capital would be reduced by up to RM687.76mil under the proposed SCR.
As the issued share capital to be reduced is higher than the existing issued share capital of RM545.37mil, Selangor Properties will undertake a bonus issue of up to 382.09 million shares.
This will be done by capitalising up to RM382.09mil from its retained earnings to increase the share capital up to a level sufficient for the capital reduction.
Selangor Properties added that the proposed bonus issue was to facilitate the implementation of the proposed SCR.
To recap, the proposed exercise is expected to be funded via the company’s internally generated funds and/or bank facilities to be obtained by Selangor Properties.
Selangor Properties, the major developer of Pusat Bandar Damansara in Kuala Lumpur back in the 1980s, owns several properties in Malaysia and Australia.
According to Selangor Properties’ annual report, the total book value of its properties in Malaysia – which include several plots of prime land and office buildings in Damansara Heights and Bukit Tunku in Kuala Lumpur – stood at RM1.24bil as of Oct 31, 2017.
Selangor Properties owns two properties in Claremont, Australia with a cumulative book value of RM190.4mil.